NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT
485APOS, 1998-06-30
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<PAGE>
 
     
      AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 30, 1998 
     
 
                                                      REGISTRATION NOS. 33-85442
                                                                        811-8828
 
================================================================================
 
 
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
 
 
                                -----------------
 
 
                                    FORM N-4
 
 
                                -----------------
 
            REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933       [X]
 
                          PRE-EFFECTIVE AMENDMENT NO.
    
                         POST-EFFECTIVE AMENDMENT NO. 6                   [X] 
     

                                      AND
        REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940   [X]
     
                                AMENDMENT NO. 9                           [X] 
     

                        (CHECK APPROPRIATE BOX OR BOXES)
 
                                -----------------
 
                  NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT
                           (EXACT NAME OF REGISTRANT)

                        NEW ENGLAND LIFE INSURANCE COMPANY
                              (NAME OF DEPOSITOR)
                501 BOYLSTON STREET, BOSTON, MASSACHUSETTS 02117
              (ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES)
                 DEPOSITOR'S TELEPHONE NUMBER: 617-578-2000
 
   NAME AND ADDRESS OF AGENT FOR
              SERVICE:                               COPY TO:
 
          H. James Wilson                    Stephen E. Roth, Esquire
Executive Vice President and General    Sutherland, Asbill & Brennan, LLP
              Counsel                     1275 Pennsylvania Avenue, N.W.
     New England Life Insurance            Washington, D.C. 20004-2404
              Company
        501 Boylston Street
    Boston, Massachusetts 02117


  It is proposed that this filing will become effective (check appropriate box)
     
  [ ] immediately upon filing pursuant to paragraph (b) of Rule 485 

  [ ] on (date) pursuant to paragraph (b) of Rule 485
  [X] 60 days after filing pursuant to paragraph (a)(i) of Rule 485
  [ ] on (date) pursuant to paragraph (a)(i) of Rule 485
  [ ] 75 days after filing pursuant to paragraph (a)(ii) of Rule 485      
  [ ] on (date) pursuant to paragraph (a)(ii) of Rule 485
  Title of Securities Being Registered:  Individual Variable Annuity Contracts
================================================================================
<PAGE>
 
                             CROSS REFERENCE SHEETS
 
  Between information contained in the Prospectus and Statement of Additional
Information and the Required Items of Form N-4.
 
<TABLE>
<CAPTION>
                                                         CAPTION IN STATEMENT
FORM N-4                                                    OF ADDITIONAL
ITEM NO.             CAPTION IN PROSPECTUS                   INFORMATION
- --------             ---------------------               --------------------
<S>       <C>                                          <C>
  1       Cover Page ................................
  2       Glossary of Special Terms used in this
           Prospectus................................
  3       Highlights; Expense Table .................
    
  4       Inapplicable ..............................      
  5       The Company; The Variable Account;
           Investments of the Variable Account--The
           New England Zenith Fund Series;
           Administration Charges, Contingent
           Deferred Sales Charge and Other
           Deductions; Voting Rights ................
  6       Administrative Charges, Contingent Deferred
           Sales Charge and Other Deductions ........
  7       The Contracts; Investments of the Variable
           Account (Substitution of Investments);
           Annuity Payments; The Fixed Account;
           Guaranteed Option ........................
  8       Annuity Payments; Amount of Variable
           Annuity Payments .........................
  9       The Contracts .............................
 10       The Contracts; Cover Page .................  Net Investment Factor
 11       The Contracts; Loan Provision for Certain
           Tax-Benefited Retirement Plans ...........
 12       Retirement Plans Offering Federal Tax
           Benefits; Federal Income Tax Status
           (Taxation of the Contracts) ..............
 13       Inapplicable ..............................
 14       Table of Contents of Statement of
           Additional Information ...................
 15                                                    Cover Page
 16                                                    Table of Contents
 17                                                    Inapplicable
 18                                                    Services to the Variable
                                                        Account
 19       Administration Charges, Contingent Deferred
           Sales Charge and Other Deductions ........
    
 20                                                    Services Related to the
                                                        Variable Account      
 21(b)                                                 Calculation of
                                                        Performance Data
 22                                                    Annuity Payments
 23                                                    Financial Statements
</TABLE>
<PAGE>
 
                      NEW ENGLAND LIFE INSURANCE COMPANY
 
                 INDIVIDUAL VARIABLE ANNUITY CONTRACT PROFILE
 
                            AMERICAN GROWTH SERIES
                                 
                              August 1, 1998     
 
  THIS PROFILE IS A SUMMARY OF SOME OF THE MORE IMPORTANT POINTS THAT YOU
SHOULD KNOW AND CONSIDER BEFORE PURCHASING THE CONTRACT. THE CONTRACT IS MORE
FULLY DESCRIBED IN THE PROSPECTUS WHICH ACCOMPANIES THIS PROFILE. PLEASE READ
THE PROSPECTUS CAREFULLY.
 
  "We," "us," and "our" refer to New England Life Insurance Company. "You" and
"your" refer to the owner of a Contract.
 
  1. WHAT IS THE CONTRACT? The Contract is an individual variable annuity
contract that provides you with a means of investing on a tax-deferred basis
through the New England Variable Annuity Separate Account (the "Variable
Account") in one or more of eleven series of the New England Zenith Fund (the
"Funds"). The Contract is intended for use with certain retirement plans that
qualify for tax benefited treatment under the Internal Revenue Code (the
"Code"), for individual use, and for use with plans and trusts not qualifying
under the Code for tax benefited treatment. The Company may make the Contracts
available for use with Section 401(k) plans. The Contract is not currently
intended for use with Section 403(b) plans subject to ERISA. It provides a
death benefit and annuity payment options, some of which provide guaranteed
income or guaranteed payment periods.
 
  The Funds offer a range of investment objectives, from conservative to
aggressive. Your investment in the Funds is NOT guaranteed and you could lose
some or all of any money you allocate to the Funds.
 
  An option is available in some states under which you may allocate all or
part of the value of your Contract to what we call the "Fixed Account." We
guarantee interest on amounts allocated to the Fixed Account at an effective
annual rate of at least 3%. We may credit a higher rate of interest. The Fixed
Account option offers you an opportunity to protect your principal and earn a
guaranteed rate of interest.
 
  The Contract, like all deferred annuity contracts, has two phases: the
accumulation phase and the annuity phase. During the accumulation phase,
earnings accumulate on a tax-deferred basis and are taxed as income when you
make a withdrawal. The annuity phase begins when you begin receiving payments
under one of the annuity payment options described in Section 2. The amount of
money accumulated under your Contract during the accumulation phase will
determine the amount of your annuity payments during the annuity phase.
 
  2. WHAT ARE MY ANNUITY OPTIONS? The Contract offers the following annuity
payment options, either in a fixed or variable form:
 
  . Income for a specified number of years;
 
  . Income for life;
 
  . Income for life, but guaranteed for at least 10 years (this is your
  default option);
 
  . Income for life, but guaranteed for at least 20 years;
 
  . Income to age 100;
 
  . Income for two lives, while either is still living;
 
  . Income for two lives, but guaranteed for at least 10 years; and
 
  . Income for two lives, with full payments while both are living and two-
  thirds to the survivor.
 
  We may make other annuity payment options available from time to time. The
Contract, when issued, will provide for the third option in variable form,
beginning at age 95 (or the maximum age permitted by state law). During the
accumulation phase, you may select another option, and/or start annuity
payments (that is, annuitize) at an earlier date by surrendering the Contract.
If annuity payments start less than 7 years after you make an investment in
the Contract, charges may apply.
<PAGE>
 
  3. HOW DO I PURCHASE A CONTRACT? The minimum initial investment is currently
$5,000, and any subsequent investments must be at least $250, with certain
exceptions described in the prospectus. We reserve the right not to accept any
purchase payment that, when combined with the value of all the Contracts that
you own, would exceed $1,000,000. Currently, we won't accept any investment
that, when combined with the value of all the Contracts you own, would exceed
$5,000,000.
 
  You are eligible to purchase a Contract if you are an individual, employer,
trust, corporation, partnership, custodian, or any entity specified in an
eligible employee benefit plan. A Contract may have joint owners. The Contract
is intended for use with the following retirement plans which offer Federal
tax benefits under the Internal Revenue Code (the "Code"):
 
  Qualified Plans--plans qualified under Section 401(a) or 403(a) of the
  Code.
 
  TSA Plans--certain annuity plans under Section 403(b) of the Code.
 
  IRAs--individual retirement accounts under Section 408(a) of the Code and
  individual retirement annuities under Section 408(b) of the Code.
 
  Roth IRAs--Roth individual retirement accounts under Section 408A of the
  Code.
 
  SEPs and SARSEPs--simplified employee pension plans and salary reduction
  simplified employee pension plans under Section 408(k) of the Code.
 
  SIMPLE IRAs--simple retirement accounts under Section 408(p) of the Code.
 
  457 Plans--eligible deferred compensation plans under Section 457 of the
  Code.
 
  Governmental Plans--governmental plans within the meaning of Section 414(d)
  of the Code.
 
The Contract may not yet be available to all of the foregoing plans, pending
appropriate state approvals. You should consult a qualified advisor about
using the Contract with those plans. The Company may make the Contract
available for use with Section 401(k) plans. The Contract is not currently
available for use with other plans, including TSA plans subject to the
Employee Retirement Income Security Act of 1974.
 
  4. WHAT ARE MY INVESTMENT OPTIONS UNDER THE CONTRACT? You can allocate your
investment among subaccounts of the Variable Account, which in turn invest in
the Funds. Your investment can be allocated to any one or a combination
(within limits) of the Funds. The Funds currently available under the Contract
are:
 
    Loomis Sayles Small Cap Series          Loomis Sayles Balanced Series
  Morgan Stanley International Magnum      Salomon Brothers Strategic Bond
             Equity Series                      Opportunities Series
      Alger Equity Growth Series        Back Bay Advisors Bond Income Series
   Goldman Sachs Midcap Value Series      Salomon Brothers U.S. Government
      Davis Venture Value Series                       Series
   Westpeak Growth and Income Series    Back Bay Advisors Money Market Series
 
In addition, the Fixed Account is available in some states.
 
  5. WHAT ARE THE EXPENSES UNDER THE CONTRACT?
 
  Administration Charges. To cover the costs of the administrative services
that we provide for the Contracts, we impose a daily charge at an annual rate
of .10% of the daily net assets attributable to your Contract. We also impose
an "administration contract charge" each year generally equal to the lesser of
2% of your total contract value or $30 to help cover the costs of the
administrative services that we provide for the Contracts. We waive this
charge in certain circumstances.
   
  Mortality and Expense Risk Charge. As compensation for assuming mortality
and expense risks under the Contract, we impose a daily charge at an annual
rate of 1.30% of the daily net assets attributable to your Contract. This
charge, as a percentage of your contract value, is guaranteed not to increase
over the life of your Contract.     
 
  Contingent Deferred Sales Charge. We do not impose any sales charge on
investments when they are made, nor do we impose a contingent deferred sales
charge ("CDSC") on withdrawals up to a certain amount each year (the "free
withdrawal amount"). We do, however, impose a CDSC upon the occurrence of a
"CDSC event," one of which is a withdrawal or surrender (including a surrender
to start annuity payments) in excess of the free withdrawal amount. All of the
CDSC events are described in the Prospectus.
 
                                       2
<PAGE>
 
  The CDSC is deducted only from the investments that we received from you
within seven years of the CDSC event according to the following schedule:
 
<TABLE>
<CAPTION>
               NUMBER OF YEARS SINCE WE  APPLICABLE
               RECEIVED THE INVESTMENT   CDSC CHARGE
               ------------------------  -----------
              <S>                        <C>
                  1.....................       7%
                  2.....................       6%
                  3.....................       5%
                  4.....................       4%
                  5.....................       3%
                  6.....................       2%
                  7.....................       1%
                Thereafter..............       0%
</TABLE>
 
We will waive the CDSC in certain circumstances.
 
  Premium Tax Charges. Certain states impose a premium tax on annuity purchase
payments received by insurance companies. Generally, we incur a state premium
tax liability on the date when annuity benefits commence. In those states, we
deduct the premium tax charge from the contract value on that date. However,
for Contracts subject to the premium tax law of states which impose a premium
tax on purchase payments when they are made (currently South Dakota), we
deduct the applicable premium tax charge at the earliest of: a full or partial
surrender of the Contract, the date when annuity benefits commence, or payment
of the death proceeds (including application of the death proceeds to the
beneficiary continuation provision) upon your death. Deductions for state
premium tax charges currently range from 1/2% to 2.25% of the contract value
(or, if applicable, purchase payments or death proceeds) for Contracts used
with retirement plans qualifying for tax benefited treatment and from 1% to 3
1/2% of the contract value (or, if applicable, death proceeds) for all other
Contracts.
 
  Other Expenses. In addition to our charges under the Contract, each Fund
deducts amounts from its assets to pay for its advisory fees and other
expenses.
   
  The following chart is designed to help you understand the charges in the
Contract. The column "Total Annual Charges" shows the total of the
administration contract charge (which is represented as .06%), the .10%
administration asset charge, the 1.30% mortality and expense risk charge, and
the investment charges for each Fund for the year ended December 31, 1997 (as
a percentage of average net assets after giving effect to any current expense
cap or expense deferral). Charges and expenses represent anticipated amounts
for the Midcap Value Series based on the management fee approved by
shareholders of the Series that became effective on May 1, 1998, and other
expenses actually incurred for the Series for 1997. The next two columns show
the dollar amount of charges you would pay assuming that you invested $1,000
in a Contract which earns 5% annually and further assuming that you surrender
your Contract or that you elect to annuitize under a period certain option for
a specified period of less than 15 years: (1) at the end of one year, and (2)
at the end of ten years. In the first example, a CDSC will be charged because
you would be surrendering or annuitizing the Contract within seven years of
making the investment. In the second example, there would be no CDSC. We are
also assuming that no premium taxes have been assessed in either example. For
more detailed information, see the Fee Table in the Prospectus for the
Contract.     
 
<TABLE>   
<CAPTION>
                            TOTAL    TOTAL ANNUAL          EXAMPLES OF TOTAL EXPENSES
                           ANNUAL    FUND CHARGES   TOTAL     PAID AT THE END OF:
                          INSURANCE    FOR YEAR    ANNUAL  ---------------------------
FUND                       CHARGES  ENDED 12/31/97 CHARGES   ONE YEAR      TEN YEARS
- ----                      --------- -------------- ------- ------------  -------------
<S>                       <C>       <C>            <C>     <C>           <C>
Small Cap...............    1.46%        1.00%      2.46%   $      89.61  $      278.19
International Magnum Eq-
 uity...................    1.46%        1.30%      2.76%          92.38         307.31
Equity Growth...........    1.46%         .87%      2.33%          88.40         265.27
Midcap Value............    1.46%         .90%      2.36%          88.68         268.26
Venture Value...........    1.46%         .90%      2.36%          88.68         268.26
Growth and Income.......    1.46%         .82%      2.28%          87.93         260.25
Balanced................    1.46%         .85%      2.31%          88.21         263.26
Strategic Bond Opportu-
 nities.................    1.46%         .85%      2.31%          88.21         263.26
Bond Income.............    1.46%         .52%      1.98%          85.14         229.56
U.S. Government.........    1.46%         .70%      2.16%          86.81         248.09
Money Market............    1.46%         .45%      1.91%          84.48         222.25
</TABLE>    
 
                                       3
<PAGE>
 
  6. HOW WILL MY INVESTMENT IN THE CONTRACT BE TAXED? You should consult a
qualified tax advisor with regard to your Contract. Generally, taxation of
earnings under variable annuities is deferred until amounts are withdrawn or
distributions are made. The deferral of taxes on earnings under variable
annuities is designed to encourage long-term personal savings and supplemental
retirement plans. Certain penalties may apply if amounts are withdrawn
prematurely. The taxable portion of a withdrawal or distribution is taxed as
ordinary income.
 
  Special rules apply to the owner of a Contract that is not a natural person.
Generally, such an owner must include in income any increase in the excess of
the contract value over the "investment in the contract" during the taxable
year.
 
  7. DO I HAVE ACCESS TO MY MONEY? You have access to your money during the
accumulation phase by surrendering your Contract or withdrawing part of the
value of your Contract at any time. Under Contracts issued under certain tax
benefited retirement plans, you may also take a loan against its value. If you
are making a withdrawal, we require that you withdraw at least $100 and that
the value of your Contract after the withdrawal be at least $1,000.
 
  While you have access to your money during the accumulation phase, certain
charges, such as the administration contract charge, CDSC, and premium tax
charges, may be deducted on a surrender or withdrawal. Moreover, a withdrawal
or surrender may cause you to incur income taxes or penalties under the
Federal tax laws.
 
  After annuitization, under certain annuity options, you may withdraw the
commuted value of the remaining payments.
 
  8. HOW HAVE THE FUNDS PERFORMED? The following chart shows the total returns
for each Fund for each of the last 10 years (or less if the Fund began less
than 10 years ago), based on a $1,000 purchase payment. The total returns are
adjusted to reflect all Contract expenses and deductions described above
except the CDSC and premium tax charges. If applied, these charges would
reduce the performance figures in the chart. Please remember that past
performance is not a guarantee of future results.
 
<TABLE>   
<CAPTION>
FUND                      1997    1996     1995  1994    1993    1992    1991   1990  1989  1988
- ----                      -----   -----   ------ -----   -----   -----   -----  ----  ----  ----
<S>                       <C>     <C>     <C>    <C>     <C>     <C>     <C>    <C>   <C>   <C>
Small Cap...............  21.20 % 26.44 % 24.06%   N/A     N/A     N/A     N/A   N/A   N/A   N/A
International Magnum Eq-
 uity...................  (5.56)%  2.23 %  1.76%   N/A     N/A     N/A     N/A   N/A   N/A   N/A
Equity Growth...........  21.98 %  9.50 % 43.64%   N/A     N/A     N/A     N/A   N/A   N/A   N/A
Midcap Value............  13.48 % 13.45 % 25.40% (4.65)%   N/A     N/A     N/A   N/A   N/A   N/A
Venture Value...........  29.81 % 21.85 % 34.35%   N/A     N/A     N/A     N/A   N/A   N/A   N/A
Growth and Income.......  29.50 % 14.02 % 31.40% (5.58)%   N/A     N/A     N/A   N/A   N/A   N/A
Balanced................  12.35 % 12.78 % 20.06%   N/A     N/A     N/A     N/A   N/A   N/A   N/A
Strategic Bond Opportu-
 nities.................   7.16 % 10.14 % 14.73%   N/A     N/A     N/A     N/A   N/A   N/A   N/A
Bond Income.............   7.71 %  1.49 % 17.57% (6.53)%  9.06 %  4.59 % 13.95% 4.11% 8.08% 4.09%
U.S. Government.........   4.22 % (0.85)% 10.43%   N/A     N/A     N/A     N/A   N/A   N/A   N/A
Money Market............   1.42 %  1.18 %  1.71%  0.01 % (0.96)% (0.14)%  2.19% 4.03% 4.96% 3.15%
</TABLE>    
 
  9. DOES THE CONTRACT HAVE A DEATH BENEFIT? Yes. If you, the owner, die (or,
if the owner is not an individual, the annuitant dies) prior to the annuity
phase of the Contract, a death benefit will be payable to a person that you
name as the beneficiary. The death benefit will be the greater of two values:
(1) the value of the Contract next determined after the later of the date when
we receive due proof of death or an election of continuation or payment from
the beneficiary; or (2) the minimum guaranteed death benefit under the
Contract, which we calculate using a formula described in the Prospectus.
 
  10. IS THERE ANYTHING ELSE I SHOULD KNOW? The Contract has several
additional features that you may be interested in, including the following:
 
  Transfer Privilege. You can transfer from $100 to $500,000 of your
Contract's value from one Fund to another free of charge. During the
accumulation phase of the Contract, you can make as many transfers among the
Funds as you like. However, different rules apply to transfers to and from the
Fixed Account. Also, during the annuity phase, if you have chosen a variable
payment option, you can only make one transfer between Funds per
 
                                       4
<PAGE>
 
year, without Company consent, and you cannot make transfers to the Fixed
Account. We reserve the right to charge a fee for transfers (although we do
not currently do so) and to limit the number and amount of transfers in
certain circumstances.
 
  Dollar Cost Averaging. We offer an automated transfer privilege that we call
"dollar cost averaging," under which you can instruct us to make monthly
transfers from any one of your investment options to any other investment
options, subject to certain limitations, provided that a minimum of $100 must
be transferred to each investment option that you select under this feature.
 
  Systematic Withdrawals. This feature allows you to have a portion of the
value of your Contract withdrawn automatically on a monthly basis during the
accumulation phase. As long as the amount of each withdrawal is at least $100,
you can elect a fixed dollar amount or elect to have your Contract's
investment gain withdrawn. Certain limitations may apply. Of course, you may
have to pay taxes and a CDSC on these withdrawals.
 
  Free Look Right. You should also know that you have a "free look right";
i.e., the right to return the Contract to us or your sales representative and
have us cancel it within a certain number of days (usually 10, although this
varies from state to state). If you exercise this right, we will cancel the
Contract as of the day we receive your request and send you its value on that
day, which may be more or less than your initial investment in the Contract.
In some states, we are required to refund your initial investment rather than
sending you the value of your Contract.
 
  11. WHO CAN I CONTACT FOR MORE INFORMATION? You can write to us at New
England Annuities, P.O. Box 642, Boston, Massachusetts 02116, or call us at
(800) 777-5897. You can also get a recording of daily unit values by calling
(800) 333-2501. You can also request a copy of the Prospectus or Statement of
Additional Information from New England Securities Corporation, 399 Boylston
Street, Boston, Massachusetts 02116.
 
                                       5
<PAGE>
 
                               TABLE OF CONTENTS
 
<TABLE>
<S>                                                                         <C>
American Growth Series Prospectus.......................................... A-1
New England Zenith Fund Prospectus......................................... B-1
Submission Requirements.................................................... C-1
  Application
  Substitute W9, Registered Representative and NSP-244 Information
  Trustee Certification
  Dollar Cost Averaging and Settlement Option Election
  MSA/ACH and Systematic Withdrawal Election
  Transfer Request
Prospectus Receipt
</TABLE>
<PAGE>
 
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+                                                                              +
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A         +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE   +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY  +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT        +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR   +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE      +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE    +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF  +
+ANY SUCH STATE.                                                               +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

                             AMERICAN GROWTH SERIES
 
                     Individual Variable Annuity Contracts
                                   Issued By
                       New England Life Insurance Company
                              501 Boylston Street
                          Boston, Massachusetts 02116
                                 (617) 578-2000
 
  This prospectus offers individual flexible and single purchase payment
variable annuity contracts (the "Contracts") that are currently intended for
use with certain retirement plans that qualify for tax benefited treatment
under the Internal Revenue Code (the "Code"), for individual use, and for use
with plans and trusts not qualifying under the Code for tax benefited
treatment. The Contracts are not intended for use with Section 403(b) plans
subject to ERISA. See "Retirement Plans Offering Federal Tax Benefits" for more
information. All purchase payments made under the Contracts may be allocated to
New England Variable Annuity Separate Account (the "Variable Account"), a
separate investment account of New England Life Insurance Company ("NELICO" or
the "Company"). Assets of the Variable Account are invested in shares of
certain Series of the New England Zenith Fund (collectively, the "Eligible
Funds"). See "Investments of the Variable Account." The owner of a Contract
chooses the Eligible Funds in which the purchase payments are invested and may
change the choice of Eligible Funds at any time. Any one or a combination of
the following Eligible Funds may be selected, within limits:
 
Loomis Sayles Small Cap Series     Loomis Sayles Balanced Series
Morgan Stanley International       Salomon Brothers Strategic Bond Opportunities
 Magnum Equity Series               Series
Alger Equity Growth Series         Back Bay Advisors Bond Income Series
Goldman Sachs Midcap Value Series  Salomon Brothers U.S. Government Series
Davis Venture Value Series         Back Bay Advisors Money Market Series
Westpeak Growth and Income
 Series
 
  A Fixed Account option is also available in states that have approved this
option. (See "The Fixed Account" for more information.) Special limits apply to
transfers of Contract Value to and from the Fixed Account.
 
  This prospectus sets forth concisely the information about the Contracts that
a prospective investor ought to know before investing. The prospectus should be
read carefully and retained for future reference.
   
  Certain additional information about the Contracts is contained in a
Preliminary Statement of Additional Information ("SAI") dated June 30, 1998, as
it may be supplemented from time to time, which has been filed with the
Securities and Exchange Commission and is incorporated herein by reference. The
Table of Contents of the SAI appears on page A-55 of this prospectus. The SAI
is available without charge and may be obtained by writing to New England
Securities Corporation ("New England Securities"), 399 Boylston St., Boston,
Massachusetts 02116 or telephoning 1-800-356-5015.     
 
  New England Securities, an indirect subsidiary of NELICO, serves as principal
underwriter for the Variable Account.
 
      THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE  
         SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
          PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
           ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
                               OFFENSE.
                  
               The date of this Prospectus is June 30, 1998.     
                              
                           SUBJECT TO COMPLETION     
 
  THIS PROSPECTUS MUST BE ACCOMPANIED OR PRECEDED BY A CURRENT PROSPECTUS FOR
THE NEW ENGLAND ZENITH FUND AND SHOULD BE RETAINED FOR FUTURE REFERENCE.
 
  AN INVESTMENT IN THE CONTRACT IS NOT A DEPOSIT OR OBLIGATION OF, OR
GUARANTEED OR ENDORSED BY, ANY FINANCIAL INSTITUTION AND IS NOT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD
OR ANY OTHER GOVERNMENTAL AGENCY, AND INVOLVES RISK, INCLUDING THE POSSIBLE
LOSS OF PRINCIPAL.
 
                                      A-1
<PAGE>
 
                               TABLE OF CONTENTS
                                       OF
                                 THE PROSPECTUS
 
<TABLE>   
<CAPTION>
                                                                           PAGE
                                                                           ----
<S>                                                                        <C>
GLOSSARY OF SPECIAL TERMS USED IN THIS PROSPECTUS.........................  A-4
HIGHLIGHTS................................................................  A-6
EXPENSE TABLE.............................................................  A-9
HOW THE CONTRACT WORKS.................................................... A-13
THE COMPANY............................................................... A-14
THE VARIABLE ACCOUNT...................................................... A-14
INVESTMENTS OF THE VARIABLE ACCOUNT....................................... A-14
 Investment Advice........................................................ A-16
 Substitution of Investments.............................................. A-16
GUARANTEED OPTION......................................................... A-17
THE CONTRACTS............................................................. A-17
 Purchase Payments........................................................ A-17
 Allocation of Purchase Payments.......................................... A-18
 Contract Value and Accumulation Unit Value............................... A-18
 Payment on Death Prior to Annuitization.................................. A-19
 Transfer Privilege....................................................... A-22
 Dollar Cost Averaging.................................................... A-23
 Surrenders............................................................... A-24
 Systematic Withdrawals................................................... A-25
 Loan Provision for Certain Tax Benefited Retirement Plans................ A-25
 Disability Benefit Rider................................................. A-27
 Suspension of Payments................................................... A-27
 Ownership Rights......................................................... A-28
 Requests and Elections................................................... A-28
 Ten Day Right to Review.................................................. A-28
ADMINISTRATION CHARGES, CONTINGENT DEFERRED SALES CHARGE AND OTHER DEDUC-
 TIONS.................................................................... A-29
 Administration Charges................................................... A-29
 Mortality and Expense Risk Charge........................................ A-30
 Contingent Deferred Sales Charge......................................... A-30
 Premium Tax Charge....................................................... A-32
 Other Expenses........................................................... A-33
 Charges Under Contracts Purchased by Exchanging a Fund I, Preference or
  Zenith Accumulator Contract............................................. A-33
ANNUITY PAYMENTS.......................................................... A-34
 Election of Annuity...................................................... A-34
 Annuity Options.......................................................... A-35
AMOUNT OF VARIABLE ANNUITY PAYMENTS....................................... A-36
RETIREMENT PLANS OFFERING FEDERAL TAX BENEFITS............................ A-37
FEDERAL INCOME TAX STATUS................................................. A-38
 Introduction............................................................. A-38
 Taxation of the Company.................................................. A-38
 Tax Status of the Contract............................................... A-39
 Taxation of Annuities.................................................... A-40
 Qualified Contracts...................................................... A-41
 Withholding.............................................................. A-45
 Possible Changes in Taxation............................................. A-45
 Other Tax Consequences................................................... A-45
 General.................................................................. A-46
VOTING RIGHTS............................................................. A-46
</TABLE>    
 
                                      A-2
<PAGE>
 
<TABLE>   
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>                                                                         <C>
DISTRIBUTION OF CONTRACTS.................................................. A-47
THE FIXED ACCOUNT.......................................................... A-47
 General Description of the Fixed Account.................................. A-47
 Contract Value and Fixed Account Transactions............................. A-48
FINANCIAL STATEMENTS....................................................... A-49
INVESTMENT EXPERIENCE INFORMATION.......................................... A-49
APPENDIX A: Consumer Tips.................................................. A-52
APPENDIX B: Contingent Deferred Sales Charge............................... A-53
APPENDIX C: Premium Tax.................................................... A-54
</TABLE>    
 
                                      A-3
<PAGE>
 
               GLOSSARY OF SPECIAL TERMS USED IN THIS PROSPECTUS
 
  ACCOUNT. A sub-account of the Variable Account or the Fixed Account.
 
  ACCUMULATION UNIT. An accounting device used to calculate the Contract Value
prior to annuitization.
 
  ACCUMULATION UNIT VALUE. The value of an Accumulation Unit, determined as of
the close of regular trading on the New York Stock Exchange on each day the
Exchange is open. The Accumulation Unit Value of a sub-account reflects the
net investment experience of the underlying Eligible Fund and daily deductions
for the Mortality and Expense Risk Charge and Administration Asset Charge.
 
  ADMINISTRATION ASSET CHARGE. A charge deducted daily from the assets of each
sub-account of the Variable Account to cover the Company's cost of providing
certain administrative services relating to the Contracts and the Variable
Account. On an annualized basis, the charge equals .10% of daily net assets.
 
  ADMINISTRATION CONTRACT CHARGE. A charge deducted annually from the Contract
Value in the Variable Account to cover the Company's cost of providing certain
administrative services relating to the Contracts and the Variable Account.
The charge is the lesser of 2% of the total Contract Value or $30.
 
  ANNUITANT. The person on whose life the Contract is issued.
 
  ANNUITIZATION. Application of proceeds under the Contract to an annuity
option on the Maturity Date or upon an earlier surrender of the Contract.
 
  ANNUITY UNIT. An accounting device used to calculate the dollar amount of
annuity payments.
 
  BENEFICIARY. The person designated to receive Death Proceeds under a
Contract if a Contract Owner (or Annuitant, if the Contract Owner is not a
natural person) dies before annuitization of the Contract.
 
  COMMUTATION RIGHT. The payee's right, under certain variable annuity payment
options, to withdraw the commuted value of remaining annuity income payments.
The commuted value is calculated based on the assumed interest rate under the
Contract. (See "Annuity Payments--Annuity Options.")
 
  CONTINGENT ANNUITANT. If designated in the application, the person who
becomes the Annuitant under the Contract if the Annuitant dies prior to
annuitization. A Contingent Annuitant must be designated for individually
owned Contracts where the Contract Owner and Annuitant are not the same. The
Contingent Annuitant must be a Contract Owner. The Contingent Annuitant cannot
be changed after the death of the Annuitant.
 
  CONTINGENT DEFERRED SALES CHARGE. A charge deducted upon certain full and
partial surrenders and applications of proceeds to certain annuity payment
options, or, in certain circumstances, upon withdrawal of amounts that were
applied to an annuity payment option. In addition, in states where the maximum
maturity age permitted by law is less than 95, a Contingent Deferred Sales
Charge may apply at the Maturity Date.
 
  CONTRACT DATE. The date shown as the Contract Date in the Contract.
 
  CONTRACT OWNER. The person so designated in the application or as
subsequently changed.
 
  CONTRACT VALUE. On or before annuitization, the value obtained by
multiplying the number of Accumulation Units credited to the Contract by the
appropriate current Accumulation Unit Value. Under Contracts that permit
Contract loans, the Contract Value also includes the amount of Contract Value
transferred to the Company's general account as a result of a loan and any
interest credited on that amount. Under Contracts with the Fixed Account
option, the Contract Value also includes the amount of Contract Value
allocated to the Fixed Account.
 
 
                                      A-4
<PAGE>
 
  CONTRACT YEAR. A twelve month period commencing with the Contract Date and
with each Contract anniversary thereafter.
   
  DEATH PROCEEDS (PRIOR TO ANNUITIZATION). The amount payable by the Company,
prior to annuitization, upon receipt of due proof of the death of the Contract
Owner (or of the death of the first Contract Owner to die under a jointly
owned Contract) and election of payment. For a Contract that is not owned by
an individual, the Death Proceeds are payable upon receipt of due proof of the
death of the Annuitant (and election of payment) prior to annuitization. The
Death Proceeds are guaranteed to be no less than the purchase payments made,
adjusted for any previous surrenders or outstanding loans. However, after the
first six months of the first Contract Year, a higher (but never a lower)
guarantee may apply, depending on your Contract Value. In certain states, the
Death Proceeds will be reduced by the applicable premium tax charge.     
 
  ELIGIBLE FUNDS. The mutual fund portfolios in which the Variable Account
invests. Eligible Funds currently available consist of 11 Series of the New
England Zenith Fund. Purchase payments allocated to the Variable Account may
be invested in shares of one or more of these Series, as described in
"Investments of the Variable Account."
 
  FIXED ACCOUNT. A part of the Company's general account to which net purchase
payments may be allocated under certain Contracts. The Fixed Account provides
guarantees of principal and interest. Special limits apply to transfers of
Contract Value to and from the Fixed Account. See "Contract Value and Fixed
Account Transactions."
 
  MATURITY DATE. The date on which annuity payments are to commence, unless
the Contract Owner applies the Contract Value to an annuity payment option at
an earlier date. The Maturity Date will be the date when the older of the
Contract Owner(s) and the Annuitant at his or her nearest birthday would be
age 95 (or the maximum age permitted by state law, if less).
   
  MORTALITY AND EXPENSE RISK CHARGE. A charge deducted daily from the assets
of each sub-account of the Variable Account to compensate the Company for
assuming certain mortality and expense risks under the Contracts. On an
annualized basis, the charge equals 1.30% of daily net assets.     
 
  PAYEE. Any person or entity entitled to receive payment in one sum or under
an annuity payment option. The term includes (i) an Annuitant, (ii) a
Beneficiary or contingent Beneficiary who becomes entitled to payments upon
death of the Contract Owner (or Annuitant, if the Contract is not owned in an
individual capacity), and (iii) in the event of surrender or partial surrender
of the Contract, the Contract Owner.
 
  PREMIUM TAX CHARGE. A charge to recover premium taxes which the Company pays
to certain states.
 
  PURCHASE PAYMENTS. Amounts paid to the Company for investment in the
Contract.
 
  SYSTEMATIC WITHDRAWALS. A method of distributing your Contract Value which
involves a series of partial surrenders.
 
  TEN DAY RIGHT TO REVIEW. Within 10 days (or more if required by law) of your
receipt of an issued Contract you may return it to the Company or its agent
for cancellation. Upon cancellation of the Contract, the Company will return
to you the Contract Value (or, if required by state law, all purchase payments
made).
 
  VARIABLE ACCOUNT. A separate investment account of the Company designated as
the New England Variable Annuity Separate Account. The Variable Account is
divided into sub-accounts, each of which invests in shares of one of the
Eligible Funds.
 
  VARIABLE ANNUITY. An annuity providing for payments varying in amount in
accordance with the investment experience of the assets of a separate
investment account.
 
                                      A-5
<PAGE>
 
                                  HIGHLIGHTS
 
  This prospectus describes Contracts under which purchase payments are
allocated to the Variable Account. If the Fixed Account is available under
your Contract, you may allocate all or part of your purchase payments or
transfer all or part of your Contract Value to that account. For a description
of the Fixed Account, the rules regarding transactions which involve the Fixed
Account (such as special restrictions on transfers of Contract Value to and
from the Fixed Account), and the way in which the Fixed Account affects the
Contract Value, see "The Fixed Account." You should review "The Fixed Account"
carefully before allocating purchase payments or Contract Value to that
account.
 
TAX DEFERRED VARIABLE ANNUITIES:
 
  Taxation of earnings under variable annuities is generally deferred until
amounts are withdrawn or distributions made. The deferral of taxes on earnings
under variable annuities is designed to encourage long-term personal savings
and supplemental retirement plans.
 
THE CONTRACT:
 
  The American Growth Series is a variable annuity issued by the Company. The
variable annuity provides for variable payments to commence at the Maturity
Date. The Contract Owner may, however, surrender the Contract and apply the
proceeds to an annuity payment option at an earlier date. Annuity payments
generally are made on a monthly basis and will vary in amount according to the
annuity payment option selected and the investment results of the underlying
Eligible Fund(s). (See "Annuity Payments.")
 
PURCHASE PAYMENTS:
 
  Under current rules, the minimum initial purchase payment is $5,000, and the
minimum subsequent purchase payment is $250, with the following exceptions.
For Contracts issued in connection with individual retirement accounts under
Section 408(a) of the Code or individual retirement annuities under Section
408(b) of the Code (both referred to as "IRAs"), and Roth IRAs under Section
408A of the Code ("Roth IRAs") the Company will accept a minimum initial
purchase payment as low as $2,000, and monthly purchase payments as low as
$100 per month if you choose to have them withdrawn from your bank checking
account or New England Cash Management Trust account, a service known as the
Master Service Account arrangement ("MSA"). For Contracts issued in connection
with other types of retirement plans qualifying for tax-benefited treatment
under the Code, the Company will accept monthly purchase payments as low as
$50 per month if payments are made through a group billing arrangement (also
known as a "list bill" arrangement). For all other Contracts, the Company will
accept monthly purchase payments as low as $100 per month if they are made
through MSA. In the case of a Contract issued in exchange for a contract
issued by New England Variable Annuity Fund I (a "Fund I contract"), New
England Retirement Investment Account (a "Preference contract"), or The New
England Variable Account (a "Zenith Accumulator contract") (each an "old
contract"), the Company may consent to waive the minimum initial and
subsequent purchase payment amounts to correspond with the terms of the old
contract. The Company reserves the right to limit purchase payments made in
any Contract Year or in total under a Contract. The Company currently reserves
the right not to accept any purchase payment that, when combined with the
Contract Value under all Contracts owned by a Single Contract Owner, would
exceed $1,000,000. Under current rules, in no event will the Company accept a
purchase payment that, when combined with the Contract Value under all
Contracts owned by a Single Contract Owner, would exceed $5,000,000. If a
Contract Owner selects a single purchase payment Contract in the application,
the Company reserves the right not to accept any additional purchase payments.
No purchase payment may be made (1) within seven years prior to the Contract's
Maturity Date (except under Contracts issued in Pennsylvania or New York), or
(2) after a Contract Owner (or after the Annuitant, if the Contract is not
owned in an individual capacity) reaches age 86. (See "Purchase Payments.")
 
OWNERSHIP:
 
  The Contracts may be purchased and owned by an individual, an employer, a
trust, a corporation, a partnership, a custodian or any entity specified in an
eligible employee benefit plan. The Contracts are intended for use with the
following retirement plans which offer Federal tax benefits: plans qualified
under Section 401(a) or 403(a) of the Code ("Qualified Plans"), certain
annuity plans under Section 403(b) of the Code ("TSA Plans"), IRAs,
 
                                      A-6
<PAGE>
 
including Roth IRAs, simplified employee pension plans and salary reduction
simplified employee pension plans under Section 408(k) of the Code ("SEPs" and
"SARSEPs"), Simple Retirement Accounts under Section 408(p) of the Code
("SIMPLE IRAs"), eligible deferred compensation plans under Section 457 of the
Code ("Section 457 Plans"), and governmental plans within the meaning of
Section 414(d) of the Code ("Governmental Plans"). See "Retirement Plans
Offering Federal Tax Benefits." The Contracts may not yet be available to all
of the foregoing types of plans pending appropriate state approvals. The
Company may make the Contracts available for use with Section 401(k) plans.
The Contracts are not currently available to other plans, such as TSA Plans
subject to ERISA, that qualify for tax benefits under the Code.
 
  A Contract may have joint owners. If the Annuitant is not the Contract Owner
and the Contract Owner is an individual, then the Contract Owner must be the
Contingent Annuitant. Under a jointly owned Contract, if the Annuitant is not
one of the Contract Owners, then one Contract Owner must be the Contingent
Annuitant. Where a Contract is used to fund an IRA or TSA Plan, the Contract
Owner must be the Annuitant, and no Contingent Annuitant will be allowed.
 
  The Company relies on instructions from trustees and custodians, as Contract
Owners, who may exercise certain rights under the Contracts on behalf of plan
participants. In any event, references to "you" in this prospectus refer to
the Contract Owner(s) or to plan participants who may be entitled to instruct
their trustee or custodian with regard to the exercise of these rights. (See
"Ownership Rights.")
 
INVESTMENT OPTIONS:
 
  You may allocate purchase payments to the Eligible Funds or to the Fixed
Account (if available under your Contract). Your Contract Value may be
distributed among no more than 10 accounts (including the Fixed Account) at
any time.
 
  You may change your allocation of future purchase payments. It is the
Company's position that, under current tax law, you may also transfer Contract
Value between Eligible Funds without incurring federal income tax
consequences. The Company reserves the right to limit the number and amount of
transfers and charge a transfer fee. Currently the Company does not charge a
transfer fee or limit the number of transfers prior to annuitization. However,
special limits apply in situations which the Company determines involve
"market-timing." (See "Transfer Privilege" for more information.) Currently,
the Company's rules for transfers prior to annuitization generally require
that the amount transferred to or from any sub-account must be at least $100.
After variable annuity payments begin, the Company allows one transfer per
year in total without Company consent. Special limits apply to transfers of
Contract Value to and from the Fixed Account. (See "The Fixed Account" for a
description of transfers involving that account.) The maximum amount which can
be transferred is $500,000 per transaction.
 
CHARGES:
   
  No sales charges are deducted from purchase payments before they are
invested in the Contract. The Company currently imposes a premium tax charge
under Contracts on the lives of Annuitants residing in states imposing premium
taxes. (See Appendix C.) Generally, the Company deducts any applicable premium
tax charge from the Contract Value on the date when annuity payments begin. In
South Dakota the Company deducts the premium tax charge at the earliest of: a
full or partial surrender, annuitization or payment of the Death Proceeds
(including application of the Death Proceeds to the Beneficiary Continuation
provision) due to the death of a Contract Owner (or Annuitant under a Contract
not owned in an individual capacity). (See "Premium Tax Charge.") For assuming
mortality and expense risks under the Contract, the Company deducts an amount
equal to an annual rate of 1.30% of the daily net assets of the Variable
Account. (See "Mortality and Expense Risk Charge.") The Company deducts an
amount equal to an annual rate of .10% of the daily net assets of the Variable
Account for administrative expenses and also imposes an annual administration
charge against your Contract Value in the Variable Account, equal to the
lesser of 2% of the total Contract Value (including any Contract Value you
have allocated to the Fixed Account and any Contract Value held in the
Company's general account as the result of a loan) and $30. (The annual
administration charge will be waived for any Contract Year in which the
Contract Value reaches a certain amount established by the Company. In
addition, the charge will not apply if the entire Contract Value is allocated
to the Fixed Account. See "Administration Charges.")     
 
                                      A-7
<PAGE>
 
  A Contingent Deferred Sales Charge will be imposed on certain full and
partial surrenders and applications of proceeds to certain annuity payment
options, or, in certain circumstances, on withdrawal of amounts that were
applied to an annuity payment option. (See "Contingent Deferred Sales
Charge.") In addition, a Contingent Deferred Sales Charge may apply at the
Maturity Date under Contracts issued in Pennsylvania or New York, if at that
time a purchase payment has been invested less than seven years. The
Contingent Deferred Sales Charge is a maximum of 7% of each purchase payment
made. In no event will the amount of the Contingent Deferred Sales Charge
exceed the equivalent of 8% of the first $50,000 of purchase payments and 6.5%
of purchase payments in excess of $50,000.
 
TEN DAY RIGHT TO REVIEW:
 
  Within 10 days (or more where required by state insurance law) after you
receive the Contract you may return it to the Company or the Company's agent
for cancellation. The Company will return to you the Contract Value (or, if
required by state law or regulation, all purchase payments made). (See "Ten
Day Right to Review.")
 
PAYMENT ON DEATH:
   
  The Contract provides for a payment to the Beneficiary if the Contract Owner
dies (or if a Contract Owner under a jointly owned Contract dies) prior to
annuitization. (In the case of a Contract not owned in an individual capacity,
the Death Proceeds will be paid if the Annuitant dies prior to annuitization.)
The Contract has a minimum guaranteed death benefit, equal to the purchase
payments made under the Contract, adjusted for any previous surrenders.
However, six months after the issue date of the Contract, and at six month
intervals thereafter until the Contract Owner's 76th birthday, the minimum
guaranteed death benefit payable is recalculated to determine whether a higher
(but never a lower) guarantee will apply. (Under a jointly owned Contract, the
recalculation of the minimum death benefit will be made at six month intervals
until the 71st birthday of the older Contract Owner.) Any additional purchase
payments will immediately increase your minimum guaranteed death benefit and
any partial surrenders will immediately decrease your minimum guaranteed death
benefit. The Death Proceeds payable will be the greater of the minimum
guaranteed death benefit amount applicable to the Contract and the current
Contract Value, reduced in either case by the amount of any outstanding loan
plus accrued interest and, in certain states, by a premium tax charge. (See
"Payment on Death Prior to Annuitization.")     
 
SURRENDERS:
 
  Generally, you may surrender the Contract for all or a portion of the
Contract Value by written request at any time prior to annuitization so long
as, after a partial surrender, the remaining Contract Value is at least
$1,000. Under the Company's current rules, a partial surrender must be at
least $100. (See "Surrenders." Special rules apply if the Contract is subject
to a loan.) The Federal tax laws impose penalties upon, and in some cases
prohibit, certain premature distributions from the Contracts before or after
the date on which the annuity payments are to begin. (See "Federal Income Tax
Status.") A Contingent Deferred Sales Charge will be imposed in connection
with certain Contract surrenders and applications of proceeds to certain
annuity payment options, or, in certain circumstances, upon subsequent
withdrawal of amounts applied to an annuity payment option. Upon a full
surrender, a pro rata portion of the annual $30 administration charge and, in
certain states, a premium tax charge will also be deducted. In any Contract
Year, an amount may be surrendered without sales charge equal to the greater
of (1) 10% of the Contract Value at the beginning of the Contract Year and (2)
the excess of the Contract Value over purchase payments subject to the
Contingent Deferred Sales Charge on the date of the surrender (the "free
withdrawal amount"). (See "Contingent Deferred Sales Charge" for more
information.)
- -------------------------------------------------------------------------------
 
                                      A-8
<PAGE>
 
                                 EXPENSE TABLE
 
<TABLE>   
<S>                                                                       <C>
CONTRACT OWNER TRANSACTION EXPENSES(1)
    Sales Charge Imposed on Purchase Payments (as a percentage of pur-
     chase payments).....................................................    0%
    Maximum Contingent Deferred Sales Charge(2) (as a percentage of each
     purchase payment)...................................................    7%
    Transfer Fee(3)......................................................   $ 0
ANNUAL CONTRACT FEE
    Administration Contract Charge (per Contract)(4).....................   $30
SEPARATE ACCOUNT ANNUAL EXPENSES(5)
(as a percentage of average net assets)
    Mortality and Expense Risk Charge.................................... 1.30%
    Administration Asset Charge..........................................  .10%
                                                                          -----
        Total Separate Account Annual Expenses........................... 1.40%
</TABLE>    
 
                            NEW ENGLAND ZENITH FUND
 
OPERATING EXPENSES FOR THE YEAR ENDED 12/31/97
 (AS A PERCENTAGE OF AVERAGE NET ASSETS AFTER CURRENT EXPENSE CAP OR EXPENSE
 DEFERRAL)(6)
 
<TABLE>
<CAPTION>
                                   MORGAN
                         LOOMIS    STANLEY                 GOLDMAN         WESTPEAK
                         SAYLES INTERNATIONAL               SACHS   DAVIS   GROWTH   LOOMIS
                         SMALL     MAGNUM     ALGER EQUITY MIDCAP  VENTURE   AND     SAYLES
                          CAP      EQUITY        GROWTH     VALUE   VALUE   INCOME  BALANCED
                         SERIES    SERIES        SERIES    SERIES* SERIES   SERIES   SERIES
                         ------ ------------- ------------ ------- ------- -------- --------
<S>                      <C>    <C>           <C>          <C>     <C>     <C>      <C>
Management Fee.......... 1.00%       .90%         .75%      .75%    .75%     .70%     .70%
Other Expenses..........    --       .40%         .12%      .15%    .15%     .12%     .15%
                         -----      -----         ----      ----    ----     ----     ----
  Total Series Operating
   Expenses............. 1.00%      1.30%         .87%      .90%    .90%     .82%     .85%
</TABLE>
 
<TABLE>
<CAPTION>
                                        SALOMON     BACK BAY  SALOMON   BACK BAY
                                        BROTHERS    ADVISORS  BROTHERS  ADVISORS
                                     STRATEGIC BOND   BOND      U.S.     MONEY
                                     OPPORTUNITIES   INCOME  GOVERNMENT  MARKET
                                         SERIES      SERIES    SERIES    SERIES
                                     -------------- -------- ---------- --------
<S>                                  <C>            <C>      <C>        <C>
Management Fee......................      .65%        .40%      .55%      .35%
Other Expenses......................      .20%        .12%      .15%      .10%
                                          ----        ----      ----      ----
  Total Series Operating Expenses...      .85%        .52%      .70%      .45%
</TABLE>
- --------
* Anticipated annual operating expenses for the Goldman Sachs Midcap Value
  Series are based on the management fee approved by shareholders of the
  Series that became effective on May 1, 1998, and other expenses actually
  incurred for the Series for 1997.
 
                                      A-9
<PAGE>
 
EXAMPLE (NOTE: The examples shown below are entirely hypothetical. Although
they are based on the expenses shown in the expense tables above, the examples
are not representations of past or future performance or expenses. Actual
performance and/or expenses may be more or less than shown.(7)) For purchase
payments allocated to each of the Series indicated:
 
  You would pay the following expenses on a
   $1,000 purchase payment assuming 1) 5% annual
   return on the underlying New England Zenith
   Fund Series and 2) that you surrender your
   Contract or that you elect to annuitize under
   a period certain option for a specified period
   of less than 15 years, at the end of each time
   period (a contingent deferred sales charge
   will apply at the end of 1 year, 3 years and 5
   years):
 
<TABLE>   
<CAPTION>
                                                 1 YEAR 3 YEARS 5 YEARS 10 YEARS
                                                 ------ ------- ------- --------
     <S>                                         <C>    <C>     <C>     <C>
     Loomis Sayles Small Cap...................  $89.61 $125.03 $160.69 $278.19
     Morgan Stanley International Magnum Equi-
      ty.......................................   92.38  133.52  175.52  307.31
     Alger Equity Growth.......................   88.40  121.32  154.19  265.27
     Goldman Sachs Midcap Value................   88.68  122.18  155.69  268.26
     Davis Venture Value.......................   88.68  122.18  155.69  268.26
     Westpeak Growth and Income................   87.93  119.89  151.68  260.25
     Loomis Sayles Balanced....................   88.21  120.74  153.18  263.26
     Salomon Brothers Strategic Bond Opportuni-
      ties.....................................   88.21  120.74  153.18  263.26
     Back Bay Advisors Bond Income.............   85.14  111.27  136.47  229.56
     Salomon Brothers U.S. Government..........   86.81  116.45  145.62  248.09
     Back Bay Advisors Money Market............   84.48  109.24  132.89  222.25
</TABLE>    
 
  You would pay the following expenses on a
   $1,000 purchase payment assuming 1) 5% annual
   return on the underlying New England Zenith
   Fund Series and 2) that you do not surrender
   your Contract or that you elect to annuitize
   under a life contingency option, or under a
   period certain option for a minimum specified
   period of 15 years, at the end of each time
   period (no contingent deferred sales charge
   will apply)(8):
 
<TABLE>   
<CAPTION>
                                                 1 YEAR 3 YEARS 5 YEARS 10 YEARS
                                                 ------ ------- ------- --------
     <S>                                         <C>    <C>     <C>     <C>
     Loomis Sayles Small Cap...................  $24.89 $76.51  $130.69 $278.19
     Morgan Stanley International Magnum Equi-
      ty.......................................   27.88  85.45   145.52  307.31
     Alger Equity Growth.......................   23.59  72.61   124.19  265.27
     Goldman Sachs Midcap Value................   23.89  73.51   125.69  268.26
     Davis Venture Value.......................   23.89  73.51   125.69  268.26
     Westpeak Growth and Income................   23.09  71.10   121.68  260.25
     Loomis Sayles Balanced....................   23.39  72.00   123.18  263.26
     Salomon Brothers Strategic Bond Opportuni-
      ties.....................................   23.39  72.00   123.18  263.26
     Back Bay Advisors Bond Income.............   20.08  62.02   106.47  229.56
     Salomon Brothers U.S. Government..........   21.88  67.48   115.62  248.09
     Back Bay Advisors Money Market............   19.37  59.89   102.89  222.25
</TABLE>    
 
                                     A-10
<PAGE>
 
- --------
NOTES:
(1) Premium tax charges are not shown. They range from 0% (in most states) to
    3.5% of Contract Value (or if applicable, purchase payments). The amount
    of the premium tax charge, if any, is generally deducted from Contract
    Value on the date selected by the Contract Owner for the commencement of
    annuity benefits, but in certain states is deducted at the earliest of: a
    full or partial surrender, annuitization, or payment of the Death Proceeds
    due to the death of the Contract Owner (or Annuitant if the Contract is
    not owned in an individual capacity). (See "Premium Tax Charge.")
(2) The Contingent Deferred Sales Charge applies to each purchase payment and
    declines annually over the first seven year period the purchase payment is
    invested in the Contract until it reaches 0% for that purchase payment.
    Amounts subject to the Contingent Deferred Sales Charge will be determined
    by assuming that purchase payments are withdrawn (whether for a surrender
    or annuitization) on a "first in-first out" basis. An amount may be
    surrendered without sales charge in any one Contract Year equal to the
    greater of: (1) 10% of the Contract Value at the beginning of the Contract
    Year; and (2) the excess of the Contract Value over purchase payments that
    are subject to the Contingent Deferred Sales Charge at the time of
    surrender.
(3) The Company reserves the right to limit the number and amount of transfers
    and impose a transfer fee.
(4) This charge is not imposed after annuitization. As a percentage of the
    estimated average Contract Value in the Variable Account, this fee equals
    .06%, based on an estimated average Contract Value of approximately
    $50,981 over the period from January 1, 1997 to December 31, 1997.
(5) These charges are not imposed on the Fixed Account after annuitization if
    annuity payments are made on a fixed basis.
   
(6) Total Series Operating Expenses are based on the amount of such expenses
    applied against assets at December 31, 1997, after giving effect to the
    applicable voluntary expense cap or expense deferral. For the Loomis
    Sayles Small Cap Series, Total Series Operating Expenses take into account
    a voluntary cap on expenses by TNE Advisers, Inc. ("TNE Advisers"), the
    Series investment adviser, which will bear all expenses that exceed 1.00%
    of average daily net assets. Absent this cap or any other expense
    reimbursement arrangement, Total Series Operating Expenses for the Loomis
    Sayles Small Cap Series for the year ended December 31, 1997 would have
    been 1.14%. Total Series Operating Expenses for the Goldman Sachs Midcap
    Value (formerly Loomis Sayles Avanti Growth), Westpeak Growth and Income,
    Back Bay Advisors Bond Income and Back Bay Advisors Money Market Series
    are after giving effect to a voluntary expense cap. For each of these
    Series, TNE Advisers bears those expenses (other than the management fee)
    that exceed 0.15% of average daily net assets. Without this cap or any
    other expense reimbursement arrangement, Total Series Operating Expenses
    for the Goldman Sachs Midcap Value (formerly Loomis Sayles Avanti Growth)
    for the year ended December 31, 1997 would have been .86%. For the six
    other Series shown, the Total Series Operating Expenses are after giving
    effect to a voluntary expense deferral. As of May 1, 1998 the Goldman
    Sachs Midcap Value is subject to the voluntary expense deferral described
    below for the six other Series shown with an annual expense limit of .90%
    of net assets. Under the deferral, expenses which exceed a certain limit
    are paid by TNE Advisers in the year they are incurred and transferred to
    the Series in a future year when actual expenses of the Series are below
    the limit. The limit on expenses for each of these Series is: 1.30% of
    average daily net assets for the Morgan Stanley International Magnum
    Equity Series; .90% of average daily net assets for the Alger Equity
    Growth and Davis Venture Value Series; .85% of average daily net assets
    for the Loomis Sayles Balanced and Salomon Brothers Strategic Bond
    Opportunities Series; and .70% of average daily net assets for the Salomon
    Brothers U.S. Government Series. Absent the expense deferral, Total Series
    Operating Expenses for these Series for the year ended December 31, 1997
    would have been: 1.59% for Morgan Stanley International Magnum Equity
    Series; .86% for Loomis Sayles Balanced Series; .87% for Salomon Brothers
    Strategic Bond Opportunities Series and .98% for Salomon Brothers U.S.
    Government Series. Total Series Operating Expenses for Davis Venture Value
    Series would have been 0.85%, however, pursuant to the expense deferral
    arrangement, 0.05% was carried over from a previous year in which
    operating expenses exceeded the limit. The expense cap and deferral
    arrangements are voluntary and may be terminated at any time. See the
    attached prospectus of the New England Zenith Fund for more complete
    information.     
(7) In these examples, the average Administration Contract Charge of .06% has
    been used. (See (4), above.)
(8) If you subsequently withdraw the commuted value of amounts placed under
    any of these options, the Company will deduct from the amount you receive
    a portion of the Contingent Deferred Sales Charge amount
 
                                     A-11
<PAGE>
 
   that would have been deducted when you originally applied the Contract
   proceeds to the option. The applicable portion of the Contingent Deferred
   Sales Charge will be based on the ratio of (1) the number of whole months
   remaining at the time of withdrawal until the date when the Contingent
   Deferred Sales Charge would expire, to (2) the number of whole months that
   were remaining, when the proceeds were applied to the option, until the
   date when the Contingent Deferred Sales Charge would expire.
- -------------------------------------------------------------------------------
 
  The preceding table lists the charges and expenses incurred with respect to
purchase payments invested under the Contracts. The items listed include
charges deducted from purchase payments, charges assessed against Variable
Account assets, and charges deducted from the assets of each of the Eligible
Funds. The examples assume that the entire purchase payment was allocated
initially to a single sub-account without any subsequent transfers. The
purpose of the table is to assist you in understanding the various costs and
expenses you will bear, directly and indirectly, as a Contract Owner.
 
                                     A-12
<PAGE>

    
                             HOW THE CONTRACT WORKS

- ---------------------        ----------------------     -----------------------
   PURCHASE PAYMENT             CONTRACT VALUE           DAILY DEDUCTION FROM
                                                           VARIABLE ACCOUNT
 . You can make a             . Payments are              
   one-time                     allocated to your         . Mortality and
   investment or                choice, within              expense risk
   establish an                 limits, of                  charge of 1.30%
   ongoing                      Eligible Funds              on an annualized
   investment                   and/or the Fixed            basis is deducted
   program, subject             Account.                    from the Contract
   to the Company's                                         Value daily.
   minimum and                . The Contract                                   
   maximum purchase             Value reflects            . Administration     
   payment                      purchase                    Asset Charge of    
   guidelines.                  payments,                   0.10% on an        
- ---------------------           investment                  annualized basis   
                                experience,                 is deducted from   
- ---------------------           interest credited           the Contract       
 ADDITIONAL PAYMENTS            on Fixed Account            Value daily.       
                                allocations,                                  
 . Generally may be             partial                   . Investment        
   made at any time,            surrenders, and             advisory fees are 
   (subject to                  Contract charges.           deducted from the 
   Company limits),                                         Eligible Fund     
   but no purchase            . The Contract                assets daily.     
   payments allowed:            Value invested in       ------------------------
   (1) during the               the Eligible            
   seven years                  Funds is not            ------------------------
   immediately                  guaranteed.               ANNUAL CONTRACT FEE  
   preceding the                                                          
   Maturity Date              . Earnings are            . $30                  
   (except under                accumulated free          Administration       
   Contracts issued             of any current            Contract Charge      
   in Pennsylvania              income taxes (see         is deducted from     
   or New York); or             page A-40).               the Contract         
   (2) after a                                            Value in the         
   Contract Owner             . You may change            Variable Account     
   (or the                      the allocation of         on each              
   Annuitant, if not            future payments,          anniversary while    
   owned in an                  within limits, at         the Contract is      
   individual                   any time.                 in-force, other      
   capacity) reaches                                      than under a         
   age 86.                    . Prior to                  Payment Option.      
                                annuitization,            (May be waived       
 . Minimum $250 with            you may transfer          for certain large    
   certain                      Contract Value            Contracts.) A pro    
   exceptions (see              among accounts,           rata portion is      
   page A-17).                  currently free of         deducted on full     
- ---------------------           charge. (Special          surrender and at     
                                limits apply to           annuitization.       
- ---------------------           the Fixed Account       ----------------------- 
         LOANS                  and to situations                              
                                that involve            ------------------------
 . Loans are                    "market timing.")           SURRENDER CHARGE   
   available to                                         
   participants of            . Allocations of            . Consists of  
   certain tax                  payments and                Contingent          
   qualified pension            transfers of                Deferred Sales      
   plans (see page              Contract Value              Charge based on     
   A-25).                       are limited in              purchase payments   
- ---------------------           that Contract               made (see pages     
                                Value may not be            A-30 to A-32).      
- ---------------------           allocated among       
      SURRENDERS                more than ten           ------------------------
                                accounts                                        
 . Up to the greater            (including the          ------------------------
   of: 10% of the               Fixed Account) at          PREMIUM TAX CHARGE   
   Contract Value at            any time.                                       
   the beginning of          ----------------------       . Where applicable,   
   the Contract                                             is deducted from    
   Year; and the             ----------------------         the Contract        
   excess of the               RETIREMENT BENEFITS          Value when          
   Contract Value                                           annuity benefits    
   over purchase               . Lifetime income            commence (and, in   
   payments that are             options.                   certain states,     
   subject to the                                           at the earliest     
   Contingent                  . Fixed and/or               of: full or         
   Deferred Sales                variable payout            partial             
   Charge on the                 options.                   surrender;          
   date of                                                  annuitization; or   
   surrender, can be           . Retirement                 payment of the      
   withdrawn each                benefits may be            Death Proceeds      
   year without                  taxable.                   due to the death    
   incurring a                                              of a Contract       
   Contingent                  . Premium tax                Owner or, if        
   Deferred Sales                charge may apply.          applicable, of      
   Charge, subject           ----------------------         the Annuitant).     
   to any applicable                                     ---------------------- 
   tax law                                                                      
   restrictions.                                         ---------------------- 
                                                          ADDITIONAL BENEFITS   
 . Surrenders may be                                                            
   taxable.                                               . You pay no taxes    
                                                            on your             
 . Prior to age 59                                          investment as       
   1/2 a 10% penalty                                        long as it          
   tax may apply. (A                                        remains in the      
   25% penalty tax                                          Contract.           
   may apply upon                                                               
   surrender from a                                       . Contract may be     
   SIMPLE IRA within                                        surrendered at      
   the first two                                            any time for its    
   years.)                                                  Contract Value,     
                                                            less any            
 . Premium tax                                              applicable          
   charge may apply.                                        Contingent          
- ---------------------                                       Deferred Sales      
                                                            Charge, subject     
- ---------------------                                       to any applicable   
    DEATH PROCEEDS                                          tax law             
                                                            restrictions.       
 . Guaranteed not to                                                            
   be less than your                                      . Contingent          
   total purchase                                           Deferred Sales      
   payments adjusted                                        Charge may be       
   for any prior                                            waived upon         
   surrenders or                                            evidence of         
   outstanding loans                                        terminal illness,   
   (and, where                                              confinement to a    
   applicable, net                                          nursing home, or    
   of premium tax                                           permanent and       
   charges).                                                total disability,   
                                                            if this benefit     
 . Death proceeds                                           is available in     
   pass to the                                              your state.         
   beneficiary                                           ----------------------
   without probate.                                    
                                                                             
 . Death proceeds                                                            
   may be taxable.                                        
                                                          
 . Premium tax         
   charge may apply.  
- ---------------------  
                                                                                
                                      A-13

<PAGE>
 
                                  THE COMPANY
 
  The Company was organized as a stock life insurance company in Delaware in
1980 and is authorized to operate in all states, the District of Columbia and
Puerto Rico. The Company was formerly a wholly-owned subsidiary of New England
Mutual Life Insurance Company. Effective August 30, 1996, New England Mutual
Life Insurance Company merged into Metropolitan Life Insurance Company
("MetLife"), a mutual life insurance company whose principal office is at One
Madison Avenue, New York, NY 10010. With the merger, New England Mutual Life
Insurance Company's separate corporate existence ended, and MetLife became the
parent of the Company. In connection with the merger, the Company changed its
name from "New England Variable Life Insurance Company" to "New England Life
Insurance Company," and changed its domicile from the State of Delaware to the
Commonwealth of Massachusetts. The Company's Home Office is at 501 Boylston
Street, Boston, Massachusetts 02116.
 
                             THE VARIABLE ACCOUNT
 
  The Variable Account was established by the Company as a separate investment
account under Delaware law on July 1, 1994, and became subject to
Massachusetts law when the Company changed its domicile to Massachusetts on
August 30, 1996. The Variable Account is registered as a unit investment trust
under the Investment Company Act of 1940. The Variable Account meets the
definition of a "separate account" under Federal securities laws. The Variable
Account may also be used to support other variable annuity contracts besides
the Contracts. The other contracts may have different charges, and provide
different benefits.
 
  Applicable state insurance law provides that the assets in the Variable
Account equal to the reserves and other contract liabilities of the Variable
Account shall not be chargeable with liabilities arising out of any other
business the Company may conduct. The Company believes this means that the
assets of the Variable Account equal to its reserves and other contract
liabilities are not available to meet the claims of the Company's general
creditors and may only be used to support the Contract Values under the
Contracts and the other variable annuity contracts supported by the Variable
Account. The income and realized and unrealized capital gains or losses of the
Variable Account are, in accordance with the Contracts, credited to or charged
against the Variable Account without regard to other income, gains or losses
of the Company. All obligations arising under the Contracts are, however,
general corporate obligations of the Company.
 
  Purchase payments are allocated to the sub-accounts of the Variable Account
that you elect. The value of Accumulation Units credited to your Contract and
the amount of the variable annuity payments depend on the investment
experience of the Eligible Fund in which each of your selected sub-accounts
invests. The Company does not guarantee the investment performance of the
Variable Account. Thus, you bear the full investment risk for all amounts
contributed to the Variable Account.
 
                      INVESTMENTS OF THE VARIABLE ACCOUNT
 
  Purchase payments applied to the Variable Account will be invested in one or
more of the Eligible Funds listed below, at net asset value without deduction
of any sales charge, according to the selection you make in your application.
You may change your selection of Eligible Funds for future purchase payments
at any time without charge. (See "Requests and Elections.") You also may
transfer your Contract Value among the Eligible Funds, subject to certain
conditions. (See "Transfer Privilege.") Your Contract Value may be distributed
among no more than 10 accounts (including the Fixed Account) at any time. The
Company reserves the right to add or remove Eligible Funds from time to time
as investments for the Variable Account. See "Substitution of Investments."
 
  The investment objectives and policies of certain Eligible Funds are similar
to the investment objectives and policies of other funds that may be managed
by the same subadviser. The investment results of the Eligible Funds, however,
may be higher or lower than the results of such other funds. There can be no
assurance, and no representation is made, that the investment results of any
of the Eligible Funds will be comparable to the investment results of any
other fund, even if the other fund has the same subadviser.
 
                                     A-14
<PAGE>
 
  LOOMIS SAYLES SMALL CAP SERIES
 
  The Loomis Sayles Small Cap Series seeks long-term capital growth from
investments in common stocks or their equivalent. The Series invests primarily
in stocks of small capitalization companies with good earnings growth
potential that its subadviser believes are undervalued by the market.
Normally, the Series will invest at least 65% of its assets in companies with
market capitalization in the range of the market capitalization of those
companies which make up the Russell 2000 Index at the time of investment.
 
  MORGAN STANLEY INTERNATIONAL MAGNUM EQUITY SERIES (FORMERLY DRAYCOTT
INTERNATIONAL EQUITY SERIES)
 
  The Morgan Stanley International Magnum Equity Series seeks long-term
capital appreciation through investment primarily in equity securities of non-
U.S. issuers, in accordance with the weightings of countries included in the
Morgan Stanley Capital International EAFE Index, determined by the Series'
subadviser. Under normal circumstances, at least 65% of the Series' total
assets will be invested in equity securities of at least three different
countries outside the United States.
 
  ALGER EQUITY GROWTH SERIES
 
  The Alger Equity Growth Series seeks long-term capital appreciation. The
Series' assets will be invested primarily in a diversified, actively managed
portfolio of equity securities, primarily of companies having a total market
capitalization of $1 billion or greater.
 
  GOLDMAN SACHS MIDCAP VALUE (FORMERLY LOOMIS SAYLES AVANTI GROWTH SERIES)
 
  The Goldman Sachs Midcap Value Series seeks long-term capital appreciation.
The Series invests, under normal circumstances, substantially all of its
assets in equity securities and at least 65% of its total assets in equity
securities of companies with public stock market capitalizations within the
range of the market capitalization of companies constituting the Russell
Midcap Index at the time of investment.
 
  DAVIS VENTURE VALUE SERIES (FORMERLY VENTURE VALUE SERIES)
 
  The Davis Venture Value Series seeks growth of capital. The Series will
primarily invest in domestic common stocks that its subadviser believes have
capital growth potential due to factors such as undervalued assets or earnings
potential, product development and demand, favorable operating ratios,
resources for expansion, management abilities, reasonableness of market price,
and favorable overall business prospects. The Series will generally invest
predominantly in equity securities of companies with market capitalizations of
at least $250 million.
 
  WESTPEAK GROWTH AND INCOME SERIES (FORMERLY WESTPEAK VALUE GROWTH SERIES)
 
  The Westpeak Growth and Income Series seeks long-term total return (capital
appreciation and dividend income) through investment primarily in equity
securities. Emphasis will be given to both undervalued securities ("value"
style) and securities of companies with growth potential ("growth" style).
 
  LOOMIS SAYLES BALANCED SERIES
 
  The Loomis Sayles Balanced Series seeks reasonable long-term investment
return from a combination of long-term capital appreciation and moderate
current income. The Series is "flexibly managed" in that sometimes it invests
more heavily in equity securities and at other times it invests more heavily
in fixed-income securities, depending on its subadviser's view of the economic
and investment outlook.
 
  SALOMON BROTHERS STRATEGIC BOND OPPORTUNITIES SERIES
 
  The Salomon Brothers Strategic Bond Opportunities Series seeks a high level
of total return consistent with preservation of capital. Assets will be
allocated among U.S. Government obligations, mortgage backed securities,
domestic and foreign corporate debt and sovereign debt securities rated
investment grade (BBB or higher by S&P
 
                                     A-15
<PAGE>
 
or Baa or higher by Moody's) (or unrated but deemed to be of equivalent
quality in the subadviser's judgment) and domestic and foreign corporate debt
and sovereign debt securities rated below investment grade. Depending on
market conditions, the Series may invest without limit in below investment
grade fixed-income securities. Securities of below investment grade quality
are considered high yield, high risk securities and are commonly known as
"junk bonds."
 
  BACK BAY ADVISORS BOND INCOME SERIES
 
  The Back Bay Advisors Bond Income Series seeks to provide a high level of
current income consistent with protection of capital.
 
  SALOMON BROTHERS U.S. GOVERNMENT SERIES
 
  The Salomon Brothers U.S. Government Series seeks to provide a high level of
current income consistent with preservation of capital and maintenance of
liquidity. The Series invests primarily in debt obligations (including
mortgage-backed securities) issued or guaranteed by the U.S. Government or its
agencies, authorities or instrumentalities, or derivative securities (such as
collateralized mortgage obligations) backed by such securities.
 
  BACK BAY ADVISORS MONEY MARKET SERIES
 
  The Back Bay Advisors Money Market Series seeks the highest possible level
of current income consistent with preservation of capital. The Series invests
in a variety of high quality money market instruments. Money market funds are
neither insured nor guaranteed by the U.S. Government and there can be no
assurance that the Series will maintain a stable net asset value of $100 per
share.
 
INVESTMENT ADVICE
 
  TNE Advisers, Inc., an indirect subsidiary of the Company, serves as
investment adviser for the Eligible Funds. Each of the Eligible Funds also has
a subadviser. The Back Bay Advisors Bond Income and Back Bay Advisors Money
Market Series receive investment subadvisory services from Back Bay Advisors,
L.P., an affiliate of the Company. The Westpeak Growth and Income Series
receives investment subadvisory services from Westpeak Investment Advisors,
L.P., an affiliate of the Company. The Loomis Sayles Small Cap and Loomis
Sayles Balanced Series receive investment subadvisory services from Loomis
Sayles & Company, L.P., an affiliate of the Company. The Morgan Stanley
International Magnum Equity Series receives investment subadvisory services
from Morgan Stanley Asset Management Inc. The Alger Equity Growth Series
receives investment subadvisory services from Fred Alger Management, Inc. The
Goldman Sachs Midcap Value Series' subadviser was Loomis Sayles until May 1,
1998, when Goldman Sachs Asset Management became the subadviser. The Davis
Venture Value Series receives investment subadvisory services from Davis
Selected Advisers, L.P. Davis Selected Advisers may delegate any of its
responsibilities to Davis Selected--NY, a wholly-owned subsidiary. The Salomon
Brothers U.S. Government Series and Salomon Brothers Strategic Bond
Opportunities Series receive investment subadvisory services from Salomon
Brothers Asset Management Inc. The Salomon Brothers Strategic Bond
Opportunities Series also receives certain investment subadvisory services
from Salomon Brothers Asset Management Limited, a London based affiliate of
Salomon Brothers Asset Management Inc. Each of the Eligible Funds is a Series
of the New England Zenith Fund (the "Zenith Fund"). More complete information
on each Series is contained in the attached Zenith Fund prospectus, which you
should read carefully before investing, as well as in the Zenith Fund's
Statement of Additional Information, which may be obtained free of charge by
writing to New England Securities, 399 Boylston St., Boston, Massachusetts,
02116 or telephoning 1-800-356-5015.
 
SUBSTITUTION OF INVESTMENTS
 
  If investment in the Eligible Funds or a particular Series is no longer
possible or in the judgment of the Company becomes inappropriate for the
purposes of the Contract, the Company may substitute another Eligible Fund or
Funds without your consent. Substitution may be made with respect to both
existing investments and the investment of future purchase payments. However,
no such substitution will be made without any necessary approval of the
Securities and Exchange Commission.
 
                                     A-16
<PAGE>
 
                               GUARANTEED OPTION
 
  Purchase payments may also be allocated to the Fixed Account in states that
have approved the Fixed Account option. The Fixed Account is a part of the
Company's general account and provides guarantees of principal and interest.
(See "The Fixed Account" for more information.)
 
                                 THE CONTRACTS
 
  The Contracts provide that your purchase payments will be invested by the
Company in the Eligible Fund(s) you select and that, after annuitization, the
Company will make variable annuity payments on a monthly basis unless you
elect otherwise. You assume the risk of investment gain or loss because the
value of your Contract before annuitization and, in the case of a variable
payment option, the annuity payments after annuitization, will vary with the
investment performance of the Eligible Fund(s) in which your Contract is
invested.
   
  In certain states, the Contracts that are available provide a different
minimum guaranteed death benefit and impose a lower mortality and expense risk
charge. You should consult with your agent regarding the Contracts available
in your state at the time you are considering purchasing a contract.     
 
PURCHASE PAYMENTS
 
  The minimum initial purchase payment currently required is $5,000, and the
minimum subsequent purchase payment is $250, with the following exceptions.
For Contracts issued in connection with individual retirement accounts under
Section 408(a) of the Code or individual retirement annuities under Section
408(b) of the Code (both referred to as "IRAs"), and Roth IRAs under Section
408A of the Code ("Roth IRAs") the Company will accept a minimum initial
purchase payment as low as $2,000, or monthly purchase payments as low as $100
per month if you choose to have them withdrawn from your bank checking account
or New England Cash Management Trust account, a service known as the Master
Service Account arrangement ("MSA"). For Contracts issued in connection with
other types of retirement plans qualifying for tax-benefited treatment under
the Code, the Company will accept monthly purchase payments as low as $50 per
month if payments are made through a group billing arrangement (also known as
a "list bill" arrangement). For all other Contracts, the Company will accept
monthly purchase payments as low as $100 per month if they are made through
MSA. In the case of a Contract issued in exchange for a Fund I, Preference or
Zenith Accumulator contract, the Company may consent to waive the minimum
initial and subsequent purchase payment amounts to correspond with the terms
of the old contract. The Company reserves the right to limit purchase payments
made under a Contract. The Company currently reserves the right not to accept
any purchase payment that, when combined with the Contract Value under all
Contracts owned by a single Contract Owner, would exceed $1,000,000. Under
current rules, in no event will the Company accept a purchase payment that,
when combined with the Contract Value under all Contracts owned by a single
Contract Owner, would exceed $5,000,000. If a Contract Owner selects a single
purchase payment Contract in the application, the Company reserves the right
not to accept any additional purchase payments. If a Contract Owner selects a
flexible purchase payment Contract in the application, the Company reserves
the right to limit purchase payments in any Contract Year to three times the
amount shown in the application.
 
  NO PURCHASE PAYMENTS MAY BE MADE: (1) WITHIN SEVEN YEARS PRIOR TO THE
CONTRACT'S MATURITY DATE (EXCEPT UNDER CONTRACTS ISSUED IN PENNSYLVANIA OR NEW
YORK); OR (2) AFTER A CONTRACT OWNER (OR THE ANNUITANT, IF THE CONTRACT IS NOT
OWNED IN AN INDIVIDUAL CAPACITY) REACHES AGE 86.
 
  The Company will determine whether to approve applications for new
Contracts, and will apply initial purchase payments under new Contracts, not
later than two business days after a completed application (including the
initial purchase payment) is received at the Company's Home Office. If an
application is not complete upon receipt, the Company will apply the initial
purchase payment not later than two business days after it is completed. If an
incomplete application is not completed within five days after the Company
receives it, however, the Company will inform the applicant of the reasons for
the delay and will refund any purchase payment unless the applicant agrees
 
                                     A-17
<PAGE>
 
to have the Company retain the purchase payment until the application is
completed. The Company reserves the right to reject any application.
 
  Exchange Offer. An owner of a Fund I, Preference or Zenith Accumulator
contract may exchange his or her old contract for an American Growth Series
Contract (a "new contract"), provided that the owner's age does not exceed the
Company's maximum age at issue for a new contract, the contract value of the
old contract (along with any purchase payments submitted with the exchange
application) is at least equal to the minimum initial purchase payment for a
new contract and (unless waived by the Company) the owner meets the Company's
underwriting standards. The Company may consent to waive the minimum initial
and subsequent purchase payment amount to correspond to the terms of the old
contract. The contract value of the old contract as of the date the exchange
is effected will be credited as the initial purchase payment to the new
contract for purposes of certain administrative rules and Contract benefits.
No charges will be deducted at the time of exchange. See "Charges Under
Contracts Purchased by Exchanging Fund I, Preference and Zenith Accumulator
Contracts" for a comparison of the charges under the old contracts and the new
contracts.
 
  The American Growth Series Contract provides an enhanced death benefit, more
options under the systematic withdrawal feature than the Zenith Accumulator
contract, and access to an assortment of investment options that differs from
those currently available under the old contracts. For more information, see
"Payment on Death Prior to Annuitization," "Systematic Withdrawals,"
"Investments of the Variable Account" and "Charges Under Contracts Purchased
by Exchanging a Fund I, Preference or Zenith Accumulator Contract." In
addition, the American Growth Series Contract offers a Fixed Account option,
which is not available under the Fund I or Preference contracts. For more
information, see "The Fixed Account." In specified circumstances of Contract
Owner illness or disability, the Company will waive the Contingent Deferred
Sales Charge on an American Growth Series contract, a benefit that is not
available under the Zenith Accumulator contract. For more information, see
"Waiver of the Contingent Deferred Sales Charge" under "Contingent Deferred
Sales Charge." This benefit may not be available in all states.
 
  The American Growth Series Contract is issued by the Company, whereas
MetLife is the issuer of the old contracts. Although the Company is a
subsidiary of MetLife, MetLife does not guarantee the obligations of the
Company.
 
ALLOCATION OF PURCHASE PAYMENTS
 
  Purchase payments are converted into Accumulation Units of the sub-accounts
you select (subject to the limitation that the Contract Value may be allocated
among no more than 10 accounts, including the Fixed Account, at any time). The
number of Accumulation Units of each sub-account to be credited to the
Contract is determined by dividing the purchase payment by the Accumulation
Unit Value for the selected sub-accounts next determined following receipt of
the purchase payment at the Company's Home Office (or, in the case of the
initial purchase payment, next determined following approval of the Contract
application. In the case of an initial purchase payment to be made by
exchanging a Fund I, Preference or Zenith Accumulator contract, the payment
will be applied using the Accumulation Unit Value next determined following
approval of the Contract application and receipt of the proceeds of the other
variable annuity contract.)
 
CONTRACT VALUE AND ACCUMULATION UNIT VALUE
 
  The value of a Contract is determined by multiplying the number of
Accumulation Units credited to the Contract by the appropriate Accumulation
Unit Values. As described below, the Accumulation Unit Value of each sub-
account depends on the net investment experience of its corresponding Eligible
Fund and reflects fees and expenses borne by the Eligible Fund as well as
charges assessed against sub-account assets. The Accumulation Unit Value of
each sub-account was set at $1.00 on or about the date on which shares of the
corresponding Eligible Fund were first publicly available. The Accumulation
Unit Value is determined as of the close of regular trading on the New York
Stock Exchange on each day the Exchange is open for trading by multiplying the
most recent Accumulation Unit Value by the net investment factor for that day.
The net investment factor for any sub-account reflects the change in net asset
value per share of the corresponding Eligible Fund as of the close of regular
trading
 
                                     A-18
<PAGE>
 
   
on the Exchange from the net asset value most recently determined, the amount
of dividends or other distributions made by that Eligible Fund since the
previous determination of net asset value per share, and daily deductions for
the Mortality and Expense Risk Charge and Administration Asset Charge, equal,
on an annual basis, to 1.40% of the average daily net asset value of the sub-
account. The net investment factor may be greater or less than one. The
formula for determining the net investment factor is described under the
caption "Net Investment Factor" in the Statement of Additional Information.
    
  Under a Contract with the Fixed Account option, the total Contract Value
includes the amount of Contract Value held in the Fixed Account. (See "The
Fixed Account.") Under a Contract that permits Contract loans, the Contract
Value also includes the amount of Contract Value transferred to the Company's
general account (but outside of the Fixed Account) as the result of a loan and
any interest credited on that amount. Interest earned on the amount held in
the general account as the result of a loan will be credited to the Contract's
sub-accounts at least annually in accordance with the allocation instructions
in effect for purchase payments under your Contract on the date of the
crediting. (See "Loan Provision for Certain Tax Benefited Retirement Plans.")
 
PAYMENT ON DEATH PRIOR TO ANNUITIZATION
 
  The Contract's Death Proceeds are payable to the Beneficiary if the Company
receives due proof of the death, prior to annuitization, of: (1) the Contract
Owner; (2) the first Contract Owner to die, in the case of a Contract with
joint owners; or (3) the Annuitant, in the case of a Contract that is not
owned in an individual capacity. (In situation (2) above, if there is no named
Beneficiary, the Death Proceeds will be paid to the surviving Contract Owner.)
 
  The Contract's Death Proceeds at any time are the greater of the current
Contract Value and the minimum guaranteed death benefit. For this purpose, the
current Contract Value is the value next determined after the later of the
date when the Company receives at the Administrative Office: (1) due proof of
death; or (2) an election of continuation of the Contract or of payment either
in one sum or under an annuity payment option. Death proceeds will be reduced
by the amount of any outstanding loan plus accrued interest (see "Loan
Provision for Certain Tax Benefited Retirement Plans") and, in certain states,
by the applicable premium tax charge.
   
  At the inception of the Contract, the minimum guaranteed death benefit is
equal to your initial purchase payment. Thereafter, until six months after the
issue date, any subsequent purchase payment will immediately increase your
minimum guaranteed death benefit by the amount of the purchase payment. Any
partial surrender will immediately decrease your minimum guaranteed death
benefit by the percentage of the Contract Value being withdrawn.     
   
  Six months after the issue date, and at six month intervals thereafter until
the Contract Owner's (or, if applicable, the Annuitant's) 76th birthday, the
minimum guaranteed death benefit under the Contract is recalculated to
determine whether a higher (but never a lower) guarantee will apply. (For a
jointly owned Contract, this recalculation is made at six month intervals
until the 71st birthday of the older Contract Owner.) The purpose of the
recalculation is to give you the benefit of any positive investment experience
under your Contract. Your Contract's previous investment experience can cause
the minimum guaranteed death benefit to increase on the recalculation date,
but cannot cause it to decrease. The minimum guaranteed death benefit
determined on a recalculation date is the larger of:     
 
    (a) the minimum guaranteed death benefit that applied to your Contract
        just before the recalculation; and
 
    (b) the Contract Value on the date of the recalculation.
   
The new minimum guaranteed death benefit applies to your Contract until the
next recalculation date, or until you make a purchase payment or surrender. In
that case, the same adjustment will be made to the minimum guaranteed death
benefit as is made during the first six months.     
 
                                     A-19
<PAGE>
 
                                                                           
       
                                                                           
 EXAMPLE:     
        
     Assume that a Contract is issued with a $10,000 purchase payment on
     5/1/98. No further purchase payments are made and, during the first
     six Contract months, no partial surrenders are made. During the
     first six Contract months, the minimum guaranteed death benefit is
     $10,000. Assume that in six months on 11/1/98, the Contract Value is
     $13,000. The minimum guaranteed death benefit is reset on that date
     to $13,000.     
        
     Assume that the Contract Value increases to $15,000 by 1/1/99, and
     that you request a partial surrender of 20% of your Contract Value,
     or $3,000, on that date. The minimum guaranteed death benefit
     immediately following the partial surrender is $10,400 [$13,000-
     .20($13,000)].     
        
     Assume that on 3/15/99 the Contract Value has decreased to $10,000.
     The minimum guaranteed death benefit remains at $10,400 and the
     Death Proceeds payable on 3/15/99 is $10,400.     
   
  Under Exchanged Contracts. The initial minimum guaranteed death benefit
amount under a Contract issued in exchange for the Fund I, Preference or
Zenith Accumulator variable annuity contracts issued by New England Mutual
Life Insurance Company (now MetLife) will be the greater of the minimum death
benefit that applied to the exchanged contract on the effective date of the
exchange and the amount paid into the American Growth Series Contract at
issue. (See "Purchase Payments--Exchange Offer.") The minimum guaranteed death
benefit will be recalculated on each six month interval following the
effective date of the exchange. Any subsequent purchase payment will
immediately increase your minimum guaranteed death benefit and any partial
surrenders will immediately decrease your minimum guaranteed death benefit.
    
  Options for Death Proceeds. The Death Proceeds, reduced by the amount of any
outstanding loan plus accrued interest and by any applicable premium tax
charge, will be paid in a lump sum or will be applied to provide one or more
of the fixed or variable methods of payment available (see "Annuity Options").
(Certain annuity payment options under the Contract are not available for the
Death Proceeds.) The Contract Owner may elect the form of payment during his
or her lifetime (or during the Annuitant's lifetime, if the Contract is not
owned in an individual capacity). Such an election, particularly in the case
of Contracts issued in connection with retirement plans qualifying for tax
benefited treatment, is subject to any applicable requirements of Federal tax
law. If the Contract Owner has not elected a form of payment, the Beneficiary
has 90 days after the Company receives due proof of death to make an election.
Whether and when such an election is made could affect when the Death Proceeds
are deemed to be received under the tax laws. The Beneficiary has a choice of:
(1) receiving payment in a single sum; (2) receiving payment in the form of
certain annuity payment options that begin within one year of the date of
death; or (3) if eligible, continuing the Contract under the Beneficiary
Continuation provision or the Spousal Continuation provision, as further
described below. IF THE BENEFICIARY DOES NOT MAKE AN ELECTION WITHIN 90 DAYS
AFTER THE COMPANY RECEIVES DUE PROOF OF DEATH, AND THE BENEFICIARY IS ELIGIBLE
FOR EITHER THE BENEFICIARY CONTINUATION OR THE SPOUSAL CONTINUATION PROVISION,
THE CONTRACT WILL BE CONTINUED UNDER THE APPLICABLE CONTINUATION PROVISION.
 
  For non-tax qualified plans, the Code requires that if the Contract Owner
(or, if applicable, the Annuitant) dies prior to annuitization, the Death
Proceeds must be either: (1) distributed within five years after the date of
death; or (2) applied to a payment option payable over the life (or over a
period not exceeding the life expectancy) of the Beneficiary, provided further
that payments under the payment option must begin within one year of the date
of death. Special options apply under a non-tax qualified plan for spouses.
See "Special Options for Spouses." There are comparable rules for
distributions on the death of the Annuitant under tax qualified plans;
however, if the Beneficiary under a tax qualified Contract is the Annuitant's
spouse, the Code generally allows distributions to begin by the year in which
the Annuitant would have reached age 70 1/2 (which may be more or less than
five years after the Annuitant's death). See "Qualified Contracts--
Distributions from the Contract."
 
  If a Contract Owner (or, if applicable, the Annuitant) dies on or after
annuitization, the remaining interest in the Contract must be distributed at
least as quickly as under the method of distribution in effect on the date of
death.
 
                                     A-20
<PAGE>
 
  --BENEFICIARY CONTINUATION
 
  In keeping with the Code's general requirement that Death Proceeds must be
distributed within five years after the death of the Contract Owner (or, if
applicable, the Annuitant), the Beneficiary Continuation provision permits a
Beneficiary to hold his or her share of the Death Proceeds (as determined
after the Death Proceeds have been reduced by the amount of any outstanding
loan plus accrued interest and by any applicable premium tax charge) in the
Contract and to continue the Contract for a period ending five years after the
date of death, provided that the Beneficiary's share of the Death Proceeds
meets the Company's published minimum (currently $5,000 for non-tax qualified
Contracts and $2,000 for tax qualified Contracts). THE CONTRACT CANNOT BE
CONTINUED FOR ANY BENEFICIARY WHOSE SHARE OF THE DEATH PROCEEDS DOES NOT MEET
THE MINIMUM.
 
  The Beneficiary has 90 days after the date the Company receives due proof of
death to make an election with respect to his or her share of the Death
Proceeds. The Beneficiary may elect either: (1) payment in a single sum; (2)
application to a permitted annuity payment option with payments to begin
within one year of the date of death; or (3) Beneficiary Continuation,
provided that the Beneficiary's share of the Death Proceeds meets the
Company's published minimum. IF THE BENEFICIARY DOES NOT MAKE AN ELECTION
WITHIN 90 DAYS AFTER THE COMPANY RECEIVES DUE PROOF OF DEATH, THE CONTRACT
WILL BE CONTINUED UNDER THE BENEFICIARY CONTINUATION PROVISION FOR A PERIOD
ENDING FIVE YEARS AFTER THE DATE OF DEATH. IF BENEFICIARY CONTINUATION IS NOT
AVAILABLE BECAUSE THE BENEFICIARY'S SHARE OF THE DEATH PROCEEDS DOES NOT MEET
THE COMPANY'S PUBLISHED MINIMUM, HOWEVER, THE DEATH PROCEEDS WILL BE PAID IN A
SINGLE SUM UNLESS THE BENEFICIARY ELECTS AN ANNUITY PAYMENT OPTION WITHIN 90
DAYS AFTER THE COMPANY RECEIVES DUE PROOF OF DEATH.
 
  If the Contract is continued under the Beneficiary Continuation provision,
the Death Proceeds (reduced by the amount of any outstanding loan plus accrued
interest and any applicable premium tax charge) become the Contract Value on
the date the continuation is effected, and will be allocated among the
accounts in the same proportion as they had been prior to the continuation. In
addition, the Beneficiary will have the right to make transfers and fully or
partially surrender his or her portion of the Contract Value, but may not make
further purchase payments, take loans, or exercise the dollar cost averaging
feature. No minimum guaranteed death benefit amount or Contingent Deferred
Sales Charge will apply. Five years from the date of death of the Contract
Owner (or, if applicable, the Annuitant), the Company will pay the
Beneficiary's Contract Value to the Beneficiary. If the Beneficiary dies
during that five year period, the Beneficiary's death benefit will be the
Beneficiary's Contract Value on the date when the Company receives due proof
of the Beneficiary's death.
 
  --SPECIAL OPTIONS FOR SPOUSES
 
  Under the Spousal Continuation provision, the Contract may be continued
after the death of a Contract Owner (or the Annuitant, if the Contract is not
owned in an individual capacity) prior to annuitization in certain spousal
arrangements. First, if a Contract has spousal joint owners who are also the
only Beneficiaries under the Contract, then upon the death of one Contract
Owner, the other may elect to continue the Contract under the Spousal
Continuation provision rather than receive the Death Proceeds. In addition, if
only one spouse is the Contract Owner (or, if applicable, the Annuitant) and
the other spouse is the primary Beneficiary, the surviving spouse can elect to
continue the Contract in the event of the Contract Owner's (or Annuitant's)
death. In either of these situations, the surviving spouse may elect one of
the following three options within 90 days after the Company receives due
proof of death of the Contract Owner (or, if applicable, the Annuitant). The
surviving spouse may elect: (1) to receive the Death Proceeds (reduced by the
amount of any outstanding loan plus accrued interest and by any applicable
premium tax charge) either in one sum or under a permitted payment option; (2)
to continue the Contract under the Beneficiary Continuation provision; or (3)
to continue the Contract under the Spousal Continuation provision with the
surviving spouse as the Contract Owner (or, if applicable, the Annuitant). IF
THE SURVIVING SPOUSE DOES NOT MAKE AN ELECTION WITHIN 90 DAYS AFTER THE
COMPANY RECEIVES DUE PROOF OF DEATH, THE CONTRACT WILL AUTOMATICALLY BE
CONTINUED UNDER THE SPOUSAL CONTINUATION PROVISION, WITH THE RESULT THAT THE
SURVIVING SPOUSE WILL FOREGO THE RIGHT TO RECEIVE THE DEATH PROCEEDS AT THAT
TIME.
 
  Under the Spousal Continuation provision, all terms and conditions of the
Contract that applied prior to the death will continue to apply, regardless of
whether or not the Contract is qualified for tax benefited treatment under the
Code, except that:
 
                                     A-21
<PAGE>
 
    a. The surviving spouse will not be permitted to make additional purchase
  payments or take loans under Contracts issued in connection with a
  retirement plan qualifying for tax benefited treatment under Sections 401
  or 403 of the Internal Revenue Code; and
 
    b. The Maturity Date will be reset, if necessary, based on the age of the
  surviving spouse.
 
  Except under Contracts issued in New York or Pennsylvania, if the reset
Maturity Date would be less than seven years after the date of the most recent
purchase payment made, no Contingent Deferred Sales Charge will apply under
the Contract.
 
  Spousal Continuation will not be available if the reset Maturity Date would
be greater than the Company's permitted maximum, or if, at the time of the
Contract Owner's death, the surviving spouse is older than the maximum
maturity age under applicable state law. In addition, the Spousal Continuation
provision will not be available if, at the original Maturity Date, the
surviving spouse would be older than the maximum maturity age under applicable
state law. In most states, the maximum maturity age is 95, but the maximum age
is 85 in New York and Pennsylvania.
 
  A surviving spouse who elects Beneficiary Continuation under a Contract that
is qualified for tax-benefited treatment under the Code must begin to receive
distributions from the Contract by the earlier of: (1) five years from the
date of death; and (2) the year in which the Contract Owner (or, if
applicable, the Annuitant) would have reached age 70 1/2.
 
  If a Contract is subject to a loan at the time the Contract Owner (or, if
applicable, the Annuitant) dies, and the Contract is continued under the
Spousal Continuation provision, the amount of the outstanding loan plus
accrued interest will be treated as a taxable distribution from the Contract
to the deceased Contract Owner, and the Contract Value will be reduced
accordingly.
 
TRANSFER PRIVILEGE
 
  It is the position of the Company that you may transfer your Contract Value
among sub-accounts and/or the Fixed Account without incurring federal income
tax consequences. It is not clear, however, whether the Internal Revenue
Service will limit the number of transfers between sub-accounts and/or the
Fixed Account in an attempt to limit the Contract Owner's incidents of
ownership in the assets used to support the Contract. See "Tax Status of the
Contract--Diversification."
 
  The Company currently does not charge a transfer fee or limit the number of
transfers prior to annuitization. The Company reserves the right to limit
transfers and to charge a transfer fee. Currently all transfers prior to
annuitization are subject to a maximum of $500,000 per transfer. The Company's
current rules for transfers prior to annuitization require that the amount
transferred to or from any sub-account must be at least $100. (If the full
amount of Contract Value in a sub-account is less than $100, the amount may be
transferred to a sub-account in which Contract Value is already invested, or
it may be transferred to any sub-account if it is transferred in combination
with Contract Value from another sub-account so that the total transferred to
the new sub-account is at least $100.) After variable annuity payments begin,
the Company allows one transfer per Contract year without Company consent, and
the Fixed Account is not available under variable payment options. In applying
the $500,000 limit, the Company will treat as one transfer all transfers
requested by a Contract Owner on the same day for all Contracts he or she
owns. If the $500,000 limitation is exceeded for multiple transfers requested
on the same day that are treated as a single transfer, no amount of the
transfer will be executed by the Company. Transfers will be made at the
Accumulation Unit Values next determined after the request is received.
However, Contract Owners should be aware that because transfer limitations may
prevent you from making a transfer on the date you want to, your future
Contract Value may be lower than it would have been had the transfer been made
on the desired date.
 
  For transfers that the Company determines to be based on "market-timing"
(e.g., transfers under different Contracts that are being requested under
Powers of Attorney with a common attorney-in-fact or that are, in the
Company's determination, based on the recommendation of a common investment
adviser or broker/dealer), the current transfer limitation prior to
annuitization is one transfer every 30 days, each transfer subject to a
maximum
 
                                     A-22
<PAGE>
 
of $500,000. In applying the limitation of one $500,000 transfer every 30
days, the Company will treat as one transfer all transfers requested under
different Contracts that are being requested under Powers of Attorney with a
common attorney-in-fact or that are, in the Company's determination, based on
the recommendation of a common investment adviser or broker/dealer. If the
$500,000 limitation is exceeded for multiple transfers requested on the same
day that are treated as a single transfer, no amount of the transfer will be
executed by the Company. If a transfer is executed under one Contract and,
within the next 30 days, a transfer request for another Contract is determined
by the Company to be related to the executed transfer under this paragraph's
rules, the transfer request will not be executed by the Company. (In order for
the transfer request to be executed, it would need to be requested again after
the 30-day period and it, along with any other transfer requests that are
collectively treated as a single transfer, would need to total no more than
$500,000.)
 
  The Company's interest in applying these limitations on the maximum number
and size of transfers is to protect the interests of both Contract Owners who
are not engaging in significant transfer activity and Contract Owners who are
engaging in such activity. The Company has determined that the actions of
Contract Owners engaging in significant transfer activity among sub-accounts
may cause an adverse effect on the performance of the underlying Eligible
Funds. The movement of significant sub-account values from one sub-account to
another may prevent the appropriate Eligible Fund from taking advantage of
investment opportunities because it must maintain a significant cash position
in order to handle redemptions. Such movement may also cause a substantial
increase in Eligible Fund transaction costs which must be indirectly borne by
Contract Owners.
 
  The foregoing limitations on transfers that the Company determines to be
based on market-timing do not apply to Contracts issued in New York. In New
York as in all other states, however, transfers can be made under Powers of
Attorney only with the Company's consent.
 
  Contract Owners will be notified, in advance, if a transfer fee or limits on
the number of transfers will be imposed, or of any change in any transfer fee
or limitation on the number or amount of transfers.
 
  See "Requests and Elections" for information regarding transfers made by
written request and by telephone.
 
  For special rules regarding transfers involving the Fixed Account, see "The
Fixed Account." Transfers out of the Fixed Account are limited as to amount.
 
  Your Contract Value may be distributed among no more than 10 accounts
(including the Fixed Account) at any time. Transfer requests not complying
with this rule will not be processed.
 
DOLLAR COST AVERAGING
 
  The Company offers an automated transfer privilege referred to here as
dollar cost averaging. Under this feature you may request that an amount of
your Contract Value be transferred on the same day each month, prior to
annuitization, from any one account of your choice to one or more of the other
accounts (including the Fixed Account, subject to the limitations on transfers
into the Fixed Account), subject to the limitation that Contract Value may not
be allocated to more than 10 accounts, including the Fixed Account, at any
time. The Company currently restricts the amount of Contract Value which may
be transferred from the Fixed Account. However, these limits do not apply to
new deposits to the Fixed Account for which the dollar cost averaging program
has been elected within 30 days from the date of the deposit. In such case,
the amount of Contract Value which may be transferred from the Fixed Account
will be the greatest of: a) 25% of the Contract Value in the Fixed Account at
the end of the first day of the Contract Year; b) the amount of Contract Value
that was transferred from the Fixed Account in the previous Contract Year; or
c) the amount of Contract Value in the Fixed Account to be transferred out of
the Fixed Account under dollar cost averaging elected on new deposits within
30 days from the date of each deposit. The Company allows one dollar cost
averaging program to be active at a time. Therefore, if you transfer pre-
existing assets (corresponding to Contract Value for which the dollar cost
averaging program was not elected within 30 days from the date of each
deposit) out of the Fixed Account under the dollar cost averaging program and
would like to transfer up to 100% of new deposits under the program, then the
dollar cost averaging program on the pre-existing assets will be canceled and
a new program will begin with respect to new deposits. In this case, the pre-
existing assets may still be transferred out of the Fixed Account, however,
not under a dollar cost averaging
 
                                     A-23
<PAGE>
 
program, subject to the limitations on transfers generally out of the Fixed
Account. Currently, a minimum of $100 must be transferred to each account that
you select under this feature. If a transfer fee is imposed, transfers made
under the dollar cost averaging program will be counted against the number of
transfers per year permitted free of charge. You may cancel your use of the
dollar cost averaging program at any time prior to the monthly transfer date.
(See Appendix A for more information about Dollar Cost Averaging.)
 
SURRENDERS
 
  Prior to annuitization, you may surrender your Contract for all or part of
the Contract Value. You may receive the proceeds in cash or apply them to a
payment option. The proceeds you receive will be the Contract Value reduced by
the following amounts:
 
  . any applicable Contingent Deferred Sales Charge;
 
  . a pro rata portion of the Administration Contract Charge (on a full
    surrender only);
 
  . a premium tax charge (in certain states only); and
 
  . any outstanding loan plus accrued interest (on a full surrender only).
 
See "Administration Charges, Contingent Deferred Sales Charge and Other
Deductions" and "Loan Provision for Certain Tax Benefited Retirement Plans"
for a description of these reductions and when they apply.
 
  Federal tax laws, laws relating to employee benefit plans, or the terms of
benefit plans for which the Contracts may be purchased may restrict your right
to surrender the Contract. No surrender is permitted in connection with a
Contract issued pursuant to the Optional Retirement Program of the University
of Texas System prior to the plan participant's death, retirement, or
termination of employment in all Texas public institutions of higher
education. In addition, Federal tax laws impose penalties on certain premature
distributions from the Contracts. Full and partial surrenders and systematic
withdrawals prior to age 59 1/2 may be subject to a 10% penalty tax (and 25%
in the case of a withdrawal from a SIMPLE IRA within the first two years).
(See "Federal Income Tax Status.") The Company currently waives the Contingent
Deferred Sales Charge on distributions that are intended to satisfy required
minimum distributions, calculated as if this Contract were the participant's
only retirement plan asset. This waiver only applies if the required minimum
distribution exceeds the free withdrawal amount and no previous surrenders
were made during the Contract Year. Because a surrender may result in adverse
tax consequences, you should consult a qualified tax advisor before taking a
distribution from the Contract. (See "Federal Income Tax Status--Qualified
Contracts.")
 
  To surrender, you must submit a request in proper form to the Company's Home
Office. (See "Requests and Elections.") If you are seeking a waiver of the
Contingent Deferred Sales Charge due to terminal illness, confinement to a
nursing home or permanent and total disability, the request must include
satisfactory evidence of one of these conditions. (See "Administration
Charges, Contingent Deferred Sales Charge and Other Deductions".) IF YOU WISH
TO APPLY THE PROCEEDS TO A PAYMENT OPTION, YOU MUST SO INDICATE IN YOUR
SURRENDER REQUEST; OTHERWISE YOU WILL RECEIVE THE PROCEEDS IN A LUMP SUM AND
MAY BE TAXED ON THEM AS A FULL DISTRIBUTION. The surrender request must be
received at the Home Office before the earlier of the Maturity Date and a
Contract Owner's death (or, for Contracts not owned in an individual capacity,
before the Annuitant's death). Surrender proceeds will normally be paid within
seven days after receipt of a request in proper form at the Home Office, but
payment may, by law, be delayed under certain circumstances. (See "Suspension
of Payments.")
 
  The amount of the surrender proceeds will be based on the Accumulation Unit
Values that are next determined after the complete surrender request is
received at the Home Office; however, if you choose to apply the surrender
proceeds to a payment option, the surrender proceeds will be based on
Accumulation Unit Values determined on a later date if you so specify in your
request. Company consent is required if the amount of a partial surrender is
less than the Company's published minimum, which is currently $100. After a
partial surrender, the remaining Contract Value must be at least $1,000,
unless the Company consents to a lower amount or, if the Contract is subject
to an outstanding loan, the remaining unloaned Contract Value must be at least
10% of the total Contract Value after the partial surrender or $1,000,
whichever is greater (unless the Company consents to a lesser amount).
Otherwise, at your option, either the amount of the partial surrender will be
reduced or the transaction will be treated as a full surrender that is subject
to the full amount of any applicable Contingent Deferred Sales Charge. A
 
                                     A-24
<PAGE>
 
partial surrender will reduce your Contract Value in the sub-accounts in
proportion to the amount of your Contract Value in each sub-account, unless
you request otherwise.
 
SYSTEMATIC WITHDRAWALS
 
  The Systematic Withdrawal feature available in connection with the Contract
allows you to have a portion of the Contract Value withdrawn automatically on
a monthly basis prior to annuitization. You can elect to withdraw each month
either a fixed dollar amount (which you can change periodically) or the
investment gain in the Contract. If you elect to withdraw the investment gain
only, no loans will be permitted. Conversely, if you have a loan, you will not
be able to elect the investment gain only option under the Systematic
Withdrawal feature. Currently a withdrawal must be a minimum of $100; if you
choose to have the investment gain withdrawn and it is less than $100 for a
month, no withdrawal will be made that month. The Company reserves the right
to change the required minimum monthly withdrawal amount. If the New York
Stock Exchange is closed on the day when the withdrawal is to be made, the
withdrawal will be processed on the next business day. The Contingent Deferred
Sales Charge will apply to amounts received under the Systematic Withdrawal
program in the same manner as it applies to other partial surrenders and
surrenders of Contract Value. (See "Contingent Deferred Sales Charge.") If you
make a partial surrender or a purchase payment at the same time that you are
having the investment gain withdrawn under the Systematic Withdrawal feature,
the Systematic Withdrawal will be canceled effective as of the next monthly
withdrawal date; however, at your option, the Company will resume Systematic
Withdrawals on the following monthly withdrawal date (that is, the second
monthly withdrawal date after the purchase payment or partial surrender). The
amount of the Systematic Withdrawals will be adjusted to reflect the purchase
payment or partial surrender. Continuing to make purchase payments under the
Contract while you are making Systematic Withdrawals means that you could
incur any applicable Contingent Deferred Sales Charge on the withdrawals at
the same time that you are making the new purchase payments; however, no
Contingent Deferred Sales Charge will apply if you are having the investment
gain (rather than a fixed dollar amount) withdrawn. The Federal tax laws may
include systematic withdrawals in the Contract Owner's gross income in the
year in which the withdrawal amount is received and will impose a penalty tax
of 10% on certain systematic withdrawals which are premature distributions.
Additional terms and conditions for the systematic withdrawal program are set
forth in the application for the program.
 
LOAN PROVISION FOR CERTAIN TAX BENEFITED RETIREMENT PLANS
 
  Contract loans are available to participants under TSA Plans that are not
subject to ERISA and to trustees of Qualified Plans (including those subject
to ERISA). Availability of Contract loans will be subject to state insurance
department approval.
 
  The Department of Labor has issued regulations (the "ERISA regulations")
governing plan participant loans under retirement plans subject to ERISA.
Generally, the ERISA regulations will apply to retirement plans that qualify
under Section 401(a) and certain other employer-sponsored qualified plans. YOU
AND YOUR EMPLOYER ARE RESPONSIBLE FOR DETERMINING WHETHER YOUR PLAN IS SUBJECT
TO AND COMPLIES WITH THE ERISA REGULATIONS ON PARTICIPANT PLAN LOANS.
 
  It is the responsibility of the trustee of a Qualified Plan subject to ERISA
to ensure that the proceeds of a Contract loan are made available to a
participant under a separate plan loan agreement, the terms of which comply
with all the plan qualification requirements including the requirements of the
ERISA regulations on plan loans. Therefore, the plan loan agreement may differ
from the Contract loan provisions and, if you are a participant in a Qualified
Plan subject to ERISA, you should consult with the fiduciary administering the
plan loan program to determine your rights and obligations with respect to
plan loans.
 
  The ERISA regulations contain requirements for plan loans relating to their
maximum amount, availability, and other matters. Among the rules are the
requirements that the loan bear a reasonable rate of interest, be adequately
secured, provide a reasonable repayment schedule, and be made available on a
basis that does not discriminate in favor of employees who are officers or
shareholders or who are highly compensated. These regulations may change from
time to time. Failure to comply with these requirements may result in
penalties under the Code and under ERISA.
 
                                     A-25
<PAGE>
 
  One of the current requirements of the ERISA regulations is that the plan
must charge a "commercially reasonable" rate of interest for plan loans. The
Contract loan interest rate may not be considered "commercially reasonable"
within the meaning of the ERISA regulations, and it is the responsibility of
the plan fiduciary to charge the participant any additional interest under the
plan loan agreement which may be necessary to make the overall rate charged
comply with the regulation. The ERISA regulations also currently require that
a loan be adequately secured, but provide that not more than 50% of the
participant's vested account balance under the plan may be used as security
for the loan. A Contract loan is secured by the portion of the Contract Value
which is held in the Company's general account as a result of the loan. The
plan fiduciary must ensure that the Contract Value held as security under the
Contract, plus any additional portion of the participant's vested account
balance which is used as security under the plan loan agreement, does not
exceed 50% of the participant's total vested account balance under the plan.
 
  The amount of any loan may not exceed the maximum loan amount as determined
under the Company's maximum loan formula. The effect of a loan on your
Contract is that a portion of the Contract Value equal to the amount of the
loan will be transferred to the Company's general account and will earn
interest (which is credited to the Contract), currently at the effective rate
of 4 1/2% per year. This earned interest will be credited to the Contract's
sub-accounts (and, if available under your Contract, to the Fixed Account)
annually in accordance with the allocation instructions in effect for purchase
payments under your Contract on the date of the crediting. Under current
rules, interest charged on the loan will be 6 1/2% per year. Depending on the
Company's interpretation of applicable law and on the Company's administrative
procedures, the interest rates charged and earned on loaned amounts may be
changed (for example, to provide for a variable interest rate) with respect to
new loans made. The minimum loan amount is currently $1,000. Because the
amount moved to the general account as a result of the loan does not
participate in the Variable Account's investment experience, a Contract loan
can have a permanent effect on the Contract Value and death proceeds. Loans
will not be permitted for Contracts participating in the investment gain only
option of the Systematic Withdrawal feature.
 
  The Company will not permit more than one loan at a time on any Contract
except where state regulators require otherwise. In addition, the maximum
amount for a qualified loan is limited such that the amount of the loan, when
added to the outstanding loan balance of other loans, whenever made, from all
other plans of the same employer, does not exceed $50,000 reduced by the
excess of the highest outstanding loan balance of loans under such plans
during the one-year period, ending on the day before the date on which the
loan is made, over the outstanding balance of loans under such plans on the
date the loan was made, or if less, the greater of: (1) $10,000; or (2) 50% of
the current value of your nonforfeitable, accrued benefits under the plan.
Loans must be repaid within 5 years except for certain loans used for the
purchase of a principal residence, which must be repaid within 20 years.
Repayment of the principal amount and interest on the loan will be required in
equal monthly installments by means of repayment procedures established by the
Company. Contract loans are subject to applicable retirement program laws and
their taxation is determined under the Code. Under current practice, if a
Contract loan installment repayment is not made, the Company may (unless
restricted by law) make a full or partial surrender of the Contract in the
amount of the unpaid installment repayment on the Contract loan or, if there
is a default on the Contract loan, in an amount equal to the outstanding loan
balance (plus any applicable Contingent Deferred Sales Charge and
Administration Contract Charge in each case). (A default on the loan is
defined in the loan application and includes, among other things, nonpayment
of three consecutive or a total of five installment repayments, or surrender
of the Contract.) For TSA Plans that are not subject to ERISA, the current
actual distribution will be limited to pre-1989 money unless you are age 59
1/2 or otherwise comply with the legal requirements for permitted
distributions under the TSA contract. If these limitations do not apply (i.e.
you are under the age of 59 1/2 or no pre-1989 money is in your contract) the
Company will report the amount of the unpaid installment repayment or default
as a deemed distribution for tax purposes, but will postpone an actual
distribution from the Contract until the earliest distribution date permitted
under the law. An installment repayment of less than the amount billed will
not be accepted. A full or partial surrender of the Contract to repay all or
part of the loan may result in serious adverse tax consequences for the plan
participant (including penalty taxes) and may adversely affect the
qualification of the plan or Contract. The trustee of a Qualified Plan subject
to ERISA will be responsible for reporting to the IRS and advising the
participant of any tax consequences resulting from the reduction in the
Contract Value caused by the surrender and for determining whether the
surrender adversely affects the
 
                                     A-26
<PAGE>
 
qualification of the plan. In the case of a TSA Plan not subject to ERISA, the
Company will report the default to the IRS as a taxable distribution under the
Contract.
 
  The Internal Revenue Service issued proposed regulations in December of
1995, which, if finalized in their present form, would require that if the
repayment terms of a loan are not satisfied after the loan has been made due
to a failure to make a loan repayment as scheduled, including any applicable
grace period, the balance of the loan would be deemed to be distributed. If
the loan is treated as a distribution under Code Section 72(p), the proposed
regulations state that the amount so distributed is to be treated as a taxable
distribution subject to the normal rules of Code Section 72, if the
participant's interest in the plan includes after-tax contributions (or other
tax basis). A deemed distribution would also be a distribution for purposes of
the 10 percent tax in Code Section 72(t). However, a deemed distribution under
Section 72(p) would not be treated as an actual distribution for purposes of
Code Section 401, the rollover and income averaging provisions of Section 402
and the distribution restrictions of Section 403(b).
 
  Partial surrenders will be restricted by the existence of a loan and, after
any partial surrender, the remaining unloaned Contract Value must be at least
10% of the total Contract Value after the partial surrender or $1,000,
whichever is greater (unless the Company consents to a lesser amount). If a
partial surrender by the Company to enforce the loan repayment schedule would
reduce the unloaned Contract Value below this amount, the Company reserves the
right to surrender the entire Contract and apply the Contract Value to the
Contingent Deferred Sales Charge, the Administration Contract Charge and the
amount owed to the Company under the loan. If at any time an excess Contract
loan exists (that is, the Contract loan balance exceeds the Contract Value),
the Company has the right to terminate the Contract.
 
  Unless you request otherwise, Contract loans will reduce the amount of the
Contract Value in the accounts in proportion to the Contract Value then in
each account. If any portion of the Contract loan was attributable to Contract
Value in the Fixed Account, then an equal portion of each loan repayment will
have to be allocated to the Fixed Account. (For example, if 50% of the loan
was attributable to your Fixed Account Contract Value, then 50% of each loan
repayment will be allocated to the Fixed Account). Unless you request
otherwise, a repayment will be allocated to the sub-accounts in the same
proportions to which the loan was attributable to the sub-accounts.
 
  The amount of the death proceeds, the amount payable upon surrender of the
Contract and the amount applied on the Maturity Date to provide annuity
payments will be reduced by the amount of any outstanding Contract loan plus
accrued interest. In these circumstances, the amount of the outstanding
Contract loan plus accrued interest generally will be taxed as a taxable
distribution.
 
  The tax and ERISA rules relating to participant loans under tax benefited
retirement plans are complex and in some cases unclear, and they may vary
depending on the individual circumstances of each loan. The Company strongly
recommends that you, your employer and your plan fiduciary consult a qualified
tax advisor regarding the currently applicable tax and ERISA rules before
taking any action with respect to loans.
 
  The Company will provide further information regarding loans upon request.
 
DISABILITY BENEFIT RIDER
 
Subject to state availability the Company intends to offer a disability
benefit rider which may be purchased, provided the Annuitant satisfies any
applicable underwriting standards. This feature will be available only if you
are under age 60 when your Contract is issued and if you plan to make regular
annual contributions to the Contract. If the Annuitant becomes totally
disabled, the rider will provide that the Company will make monthly purchase
payments under the Contract, subject to the terms and conditions of the rider.
Consult your registered representative regarding the availability of this
rider.
 
SUSPENSION OF PAYMENTS
 
  The Company reserves the right to suspend or postpone the payment of any
amounts due under the Contract or transfers of Contract Values between sub-
accounts or to the Fixed Account when permitted under applicable Federal laws,
rules and regulations. Current Federal law permits such suspension or
postponement if: (a) the New York Stock Exchange is closed (other than for
customary weekend and holiday closings); (b) trading on the Exchange is
restricted; (c) an emergency exists such that it is not reasonably practicable
to dispose of securities
 
                                     A-27
<PAGE>
 
held in the Variable Account or to determine the value of its assets; or (d)
the Securities and Exchange Commission by order so permits for the protection
of securities holders.
 
OWNERSHIP RIGHTS
 
  During the Annuitant's lifetime, all rights under the Contract belong solely
to the Contract Owner unless otherwise provided. These rights include the
right to change the Beneficiary, to change the payment option, to assign the
Contract (subject to the restrictions referred to below), and to exercise all
other rights, benefits, options and privileges conferred by the Contract or
allowed by the Company. Transfer of ownership of the Contract under an ERISA
"Pension Plan" to a non-spousal beneficiary may require spousal consent.
 
  Qualified Plans and certain TSA Plans with sufficient employer involvement
are deemed to be "Pension Plans" under ERISA and may, therefore, be subject to
rules under the Retirement Equity Act of 1984. These rules require that
benefits from annuity contracts purchased by a Pension Plan and distributed to
or owned by a participant be provided in accordance with certain spousal
consent, present value and other requirements which are not enumerated in the
Contract. Thus, the tax consequences of the purchase of the Contracts by
Pension Plans should be considered carefully.
 
  Those Contracts offered by the prospectus which are designed to qualify for
the favorable tax treatment described below under "Federal Income Tax Status"
contain restrictions on transfer or assignment, reflecting requirements of the
Code which must be satisfied in order to assure continued eligibility for such
tax treatment. In accordance with such requirements, ownership of such a
Contract may not be changed and the Contract may not be sold, assigned or
pledged as collateral for a loan or for any other purpose except under certain
limited circumstances. A Contract Owner contemplating a sale, assignment or
pledge of the Contract should carefully review its provisions and consult a
qualified tax advisor.
 
  If Contracts offered by this prospectus are used in connection with deferred
compensation plans or retirement plans not qualifying for favorable Federal
tax treatment, such plans may also restrict the exercise of rights by the
Contract Owner. A Contract Owner should review the provisions of any such
plan.
 
REQUESTS AND ELECTIONS
 
  Requests for sub-account transfers or reallocation of future purchase
payments may be made by telephone or written request (which may be telecopied)
to the Company at its Home Office. Written requests for such transfers or
changes of allocation must be in a form acceptable to the Company. Such
written requests may be telecopied to 617-578-5412. To request a transfer or
change of allocation by telephone, please contact your registered
representative, or contact the Company's Home Office at 1-800-435-4117 between
the hours of 9:00 a.m. and 4:00 p.m., Eastern Time. Requests for transfer
(that are within the Company's current limits applicable to transfers) or
reallocation by telephone will be automatically permitted. The Company will
use reasonable procedures such as requiring certain identifying information
from the caller, tape recording the telephone instructions, and providing
written confirmation of the transaction, in order to confirm that instructions
communicated by telephone are genuine. Any telephone instructions reasonably
believed by the Company to be genuine will be your responsibility, including
losses arising from any errors in the communication of instructions. As a
result of this policy, you will bear the risk of loss. If the Company does not
employ reasonable procedures to confirm that instructions communicated by
telephone are genuine, the Company may be liable for any losses due to
unauthorized or fraudulent transactions. All other requests and elections
under a Contract must be in writing signed by the proper party, must include
any necessary documentation and must be received at the Company's Home Office
to be effective. If acceptable to the Company, requests or elections relating
to Beneficiaries and ownership will take effect as of the date signed unless
the Company has already acted in reliance on the prior status. The Company is
not responsible for the validity of any written request or election.
 
TEN DAY RIGHT TO REVIEW
 
  Within 10 days (or more where required by applicable state insurance law)
after you receive your Contract you may return it to the Company or its agent
for cancellation. Upon cancellation of the Contract, the Company will return
to you the Contract Value. If required by the insurance law or regulations of
the state in which your Contract is issued, however, the Company will refund
all purchase payments made.
 
                                     A-28
<PAGE>
 
                      ADMINISTRATION CHARGES, CONTINGENT
                  DEFERRED SALES CHARGE AND OTHER DEDUCTIONS
 
  The Company deducts various charges from Contract Value for the services
provided, expenses incurred and risks assumed in connection with the
Contracts. For example, the Company incurs costs and expenses in connection
with issuing Contracts, maintaining Contract Owner records and providing
accounting, valuation, regulatory and reporting services. The Company also
incurs costs and expenses associated with the marketing, sale and distribution
of the Contracts. In addition, the Company assumes mortality and expense risks
under the Contracts. In particular, the Company guarantees that the dollar
amount of the Administration Contract Charge and the amount of the
Administration Asset Charge as a percentage of Contract Value will not
increase over the life of a Contract, regardless of the actual expenses. Also,
the Company guarantees that, although annuity payments will vary according to
the performance of the investments you select, annuity payments will not be
affected by the mortality experience (death rate) of persons receiving such
payments or of the general population. The Company assumes this mortality risk
by virtue of annuity rates in the Contract that cannot be changed. The Company
also assumes the risk of making a minimum death benefit payment if the
Contract Owner (or, if applicable, the Annuitant) dies prior to annuitization.
(See "Payment on Death Prior to Annuitization.") The amount and manner of
deduction of Contract charges is described below. The amount of a charge may
not necessarily correspond to the costs associated with providing the services
or benefits indicated by the designation of the charge or associated with the
particular Contract. For example, the Contingent Deferred Sales Charge may not
fully cover all of the sales and distribution expenses actually incurred by
the Company, and proceeds from other charges, including the mortality and
expense risk charge, may be used in part to cover such expenses.
 
ADMINISTRATION CHARGES
 
  The Company deducts Administration Charges generally equal, on an annual
basis, to $30 per Contract (see the following paragraph) plus .10% of the
daily net assets of each sub-account. In addition, the Company may (but does
not currently) charge a transfer fee for certain transfers of Contract Value
among the sub-accounts and/or the Fixed Account, as described below.
 
  The annual Administration Contract Charge is deducted from the Contract
Value on each Contract anniversary for the prior Contract Year and will be
deducted on a pro rata basis at annuitization or at the time of a full
surrender if it is not on a Contract anniversary. Currently, the charge is not
imposed after annuitization. If two Contracts are issued to permit the funding
of a spousal IRA, the Administration Contract Charge will be imposed only on
the Contract to which the larger purchase payments have been allocated in the
Contract application. The charge is deducted entirely from the Contract Value
in the Variable Account, and not from the Contract Value in the Fixed Account
or the Company's general account as the result of a loan. The charge is the
lesser of: 2% of the total Contract Value (including any Contract Value you
have allocated to the Fixed Account and any Contract Value held in the
Company's general account as the result of a loan) and $30. The charge will be
waived for a Contract Year if (1) the Contract Value at the end of the year
was at least $50,000, OR (2) you made at least $1,000 in net deposits
(purchase payments minus partial surrenders) during that Contract Year and the
Contract Value at the end of the previous Contract Year was at least $25,000.
(A pro rata charge will always be made on a full surrender and at
annuitization, however, regardless of the amount of your Contract Value.) The
Administration Contract Charge will be deducted from each sub-account in the
ratio of your interest therein to your total Contract Value in the Variable
Account.
 
  The Administration Asset Charge is equal to an annual rate of .10% of net
assets and is deducted on a daily basis from each sub-account. As a percentage
of net assets, this charge will not increase over the life of a Contract, but
the total dollar amount of the charge will vary depending on the level of
Contract Value in the Variable Account. The Administration Asset Charge will
continue to be assessed after annuitization if annuity payments are made on a
variable basis.
 
  The Company reserves the right to charge a transfer fee for transfers of
Contract Value among sub-accounts and/or the Fixed Account, but will notify
Contract Owners in advance of any such charge. (See "Transfer Privilege.")
 
                                     A-29
<PAGE>
 
MORTALITY AND EXPENSE RISK CHARGE
   
  The Company deducts a Mortality and Expense Risk Charge from the Variable
Account. This charge is computed and deducted on a daily basis from the assets
in each sub-account attributable to the Contracts. The charge is at an annual
rate of 1.30% of the daily net assets of each such sub-account, of which .75%
represents a mortality risk charge and .55% represents an expense risk charge.
The Mortality and Expense Risk Charge as a percentage of Contract Value will
not increase over the life of a Contract. The Mortality and Expense Risk
Charge will continue to be assessed if annuity payments are made on a variable
basis after annuitization. (See "Annuity Payments.")     
 
CONTINGENT DEFERRED SALES CHARGE
 
  No charge for sales expenses is deducted from purchase payments when they
are made. However, a Contingent Deferred Sales Charge may apply on certain
events ("CDSC events"). CDSC events are: (a) a full or partial surrender of
your Contract (including surrenders where you apply the proceeds to certain
payment options); (b) in certain circumstances, a withdrawal of the commuted
value of amounts that you applied to an annuity payment option; or (c) under
Contracts issued in Pennsylvania or New York, the Maturity Date if at that
date a purchase payment has been invested for less than seven years.
 
  The Contingent Deferred Sales Charge is taken into account in calculating
the proceeds payable on a full surrender. On a partial surrender, the
Contingent Deferred Sales Charge is deducted from the Contract Value remaining
after deduction of the surrender amount requested and is taken from the
Contract Value in the sub-accounts and the Fixed Account in the same
proportion as the Contract Value surrendered.
 
  The Contingent Deferred Sales Charge equals a percentage of each purchase
payment. Each purchase payment is subject to the charge for seven years (12
month periods) from the date it is received by the Company, as follows:
 
<TABLE>
<CAPTION>
            IF WITHDRAWN DURING YEAR               CHARGE
            ------------------------               ------
            <S>                                    <C>
              1...................................   7%
              2...................................   6%
              3...................................   5%
              4...................................   4%
              5...................................   3%
              6...................................   2%
              7...................................   1%
            Thereafter............................   0%
</TABLE>
 
  In no event will the amount of the Contingent Deferred Sales Charge exceed
the equivalent of 8% of the first $50,000 of purchase payments and 6.5% of
purchase payments in excess of $50,000.
 
  Whether amounts surrendered, withdrawn or applied to an annuity payment
option are considered to include purchase payments subject to the Contingent
Deferred Sales Charge depends on the following rules.
 
  In any Contract Year you may surrender a portion of your Contract Value, the
free withdrawal amount, without incurring the Contingent Deferred Sales
Charge. The free withdrawal amount for each Contract Year is equal to the
greater of: (1) 10% of the Contract Value at the beginning of the Contract
Year; and (2) the excess of the Contract Value over purchase payments subject
to the Contingent Deferred Sales Charge on the date of surrender. If not used,
the free withdrawal amount does not carry over to the next Contract Year.
 
                                     A-30
<PAGE>
<TABLE> 
<CAPTION> 

- ---------------------------------------------------------------------------------------------------- 
 EXAMPLE: Assume that a single purchase payment of $10,000 is made into the Contract. The following 
          illustrates the free withdrawal amount available under two hypothetical situations.
 
                            HYPOTHETICAL CONTRACT VALUE
                                                                           10% OF
                                                                        BEGINNING OF  MAXIMUM FREE
                             AT BEGINNING   ON WITHDRAWAL               YEAR CONTRACT  WITHDRAWAL
                           OF CONTRACT YEAR     DATE      CONTRACT GAIN     VALUE        AMOUNT
                           ---------------- ------------- ------------- ------------- ------------
  <S>                      <C>              <C>           <C>           <C>           <C>
  Situation 1:............     $12,500         $14,000       $4,000        $1,250        $4,000
  Situation 2:............     $11,000         $10,000       $    0        $1,100        $1,100
- ---------------------------------------------------------------------------------------------------- 
</TABLE>
 
  A surrender will be attributed first to the free withdrawal amount. If you
surrender an amount greater than the free withdrawal amount, the excess will
be attributed to purchase payments on a "first-in, first-out" basis. That is,
your purchase payments will be withdrawn in the order they were made.

<TABLE> 
<CAPTION> 
- ----------------------------------------------------------------------------------------------------  
 EXAMPLE: Assume that a $10,000 purchase payment is made into the Contract on 6/1/98 and another 
          $10,000 purchase payment is made on 2/1/99. The following illustrates the Contingent 
          Deferred Sales Charge that would apply on partial surrenders in two hypothetical 
          situations.
                              HYPOTHETICAL CONTRACT VALUE
                                                                            10% OF
                                                                         BEGINNING OF  MAXIMUM FREE
                              AT BEGINNING   ON WITHDRAWAL               YEAR CONTRACT  WITHDRAWAL
                            OF CONTRACT YEAR     DATE      CONTRACT GAIN     VALUE        AMOUNT
                            ---------------- ------------- ------------- ------------- ------------
  <S>                       <C>              <C>           <C>           <C>           <C>
  Situation 1: $7,000 par-
   tial
   surrender on 12/1/99...      $22,000         $25,000       $5,000        $2,200        $5,000
 
   The first $5,000 withdrawn would be free of the Contingent Deferred Sales Charge. The remaining 
$2,000 of the withdrawal would be made from the oldest purchase payment (i.e. the 6/1/98 purchase 
payment). A 6% Contingent Deferred Sales Charge would apply to the $2,000, because the withdrawal 
would be taking place in the second year following the date of the purchase payment.
</TABLE> 
 
                          HYPOTHETICAL CONTRACT VALUE
<TABLE>
<CAPTION>
                                                                           10% OF
                                                                        BEGINNING OF  MAXIMUM FREE
                             AT BEGINNING   ON WITHDRAWAL               YEAR CONTRACT  WITHDRAWAL
                           OF CONTRACT YEAR     DATE      CONTRACT GAIN     VALUE        AMOUNT
                           ---------------- ------------- ------------- ------------- ------------
  <S>                      <C>              <C>           <C>           <C>           <C>
  Situation 2: $25,000
   surrender on 1/1/03....     $30,000         $33,000       $13,000       $3,000       $13,000
 
   The first $13,000 withdrawn would be free of the Contingent Deferred Sales Charge. The remaining 
$12,000 of the withdrawal would be made by withdrawing the $10,000 purchase payment made on 6/1/98 
and $2,000 of the $10,000 purchase payment that was made on 2/1/99. The Contingent Deferred Sales 
Charge that would apply is: 3% X $10,000 + 4% X $2,000, or $380. The remaining amount of purchase 
payments that could be subject to the Contingent Deferred Sales Charge (assuming no further 
purchase payments were made) would be $8,000.
- ----------------------------------------------------------------------------------------------------   
</TABLE> 
  Amounts surrendered under the free withdrawal provision do not reduce the
total purchase payments that are potentially subject to the Contingent
Deferred Sales Charge under your Contract.
 
  If your Contract Value is less than your total purchase payments due to a
free withdrawal, negative investment performance or deduction of the
Administration Contract Charge, the following rules apply for calculating the
Contingent Deferred Sales Charge: the deficiency will be attributed to your
most recent purchase payment first, and subsequent earnings will be credited
to that deficiency (and not treated as earnings) until Contract Value exceeds
purchase payments.
 
                                     A-31
<PAGE>
 
  Waiver of Contingent Deferred Sales Charge. No Contingent Deferred Sales
Charge will apply:
 
  . After 30 days from issue of the Contract if you apply the proceeds to a
    variable or fixed payment option involving a life contingency (described
    under "Annuity Options"), or, for a minimum specified period of 15 years,
    to either the Variable Income for a Specified Number of Years Option or
    the Variable Income Payments to Age 100 Option (described under "Annuity
    Options"), or a comparable fixed option. However, if you subsequently
    withdraw the commuted value of amounts placed under any of those options,
    the Company will deduct from the amount you receive a portion of the
    Contingent Deferred Sales Charge amount that would have been deducted
    when you originally applied the Contract proceeds to the option, taking
    into account the lapse of time from annuitization to surrender. The
    applicable portion of the Contingent Deferred Sales Charge will be based
    on the ratio of (1) the number of whole months remaining, on the date of
    the withdrawal, until the date when the Contingent Deferred Sales Charge
    would expire, to (2) the number of whole months that were remaining, when
    the proceeds were applied to the option, until the date when the
    Contingent Deferred Sales Charge would expire. (See example in Appendix
    B.)
 
  . On full or partial surrenders if the Contract Owner submits satisfactory
    evidence to the Company that the Contract Owner (or one Contract Owner
    under a jointly owned Contract, or the Annuitant, if the Contract is not
    owned in an individual capacity) is terminally ill (as defined in the
    Contract), has been confined to a nursing home for more than 90
    continuous days, or is permanently and totally disabled (as defined in
    the Contract). This benefit is only available to an original owner of the
    Contract who was not over age 65 at issue of the Contract, and may not be
    available in every state.
 
  . If under the Spousal Continuation provision the Contract's Maturity Date
    is reset to a date that is less than seven years after the most recent
    purchase payment made under the Contract. The Contingent Deferred Sales
    Charge will not apply to the Contract in these circumstances. This waiver
    of the Contingent Deferred Sales Charge will not apply, however, to
    Contracts issued in New York or Pennsylvania.
 
  . On minimum distributions required by tax law. The Company currently
    waives the Contingent Deferred Sales Charge on distributions that are
    intended to satisfy required minimum distributions, calculated as if this
    Contract were the participant's only retirement plan asset. This waiver
    only applies if the required minimum distribution exceeds the free
    withdrawal amount and no previous Surrenders were made during the
    Contract Year. (See "Federal Income Tax Status--Qualified Contracts.")
 
  The Company may also waive the Contingent Deferred Sales Charge if a
Contract Owner surrenders a Contract or Contracts in order to purchase a group
variable annuity issued by the Company or New England Mutual Life Insurance
Company (now MetLife).
 
  The Contracts may be sold directly, without compensation, to a registered
representative, to employees, officers, directors, and trustees of the Company
and its affiliated companies, and spouses and immediate family members (i.e.
children, siblings and parents (including siblings and parents of spouses),
and grandparents) of the foregoing, and to employees, officers, directors,
trustees and registered representatives of any broker-dealer authorized to
sell the Contracts or any bank affiliated with such a broker-dealer and of any
sub-adviser to the Eligible Funds, and spouses and immediate family members of
the foregoing. If consistent with applicable state insurance law, the
Contracts may also be sold, without compensation, to the Company or MetLife
for use with deferred compensation plans for agents, employees, officers,
directors, and trustees of the Company and its affiliated companies, subject
to any restrictions imposed by the terms of such plans, or to persons who
obtain their Contracts through a bank, adviser or consultant to whom they pay
a fee for investment or planning advice. If sold under these circumstances,
the Contracts will be credited with an additional percentage of premium to
reflect in part or in whole any cost savings associated with the direct sale,
but only if such credit will not be unfairly discriminatory to any person. No
additional premium will be credited to Contracts purchased by persons
described above in exchange for another variable annuity Contract issued by
the Company or its affiliated companies.
 
PREMIUM TAX CHARGE
 
  Certain states impose a premium tax on annuity purchase payments received by
insurance companies. The Company pays this tax when incurred, and recovers
this tax by imposing a premium tax charge on affected
 
                                     A-32
<PAGE>
 
Contracts in accordance with the following rules. Generally, the Company
incurs a state premium tax liability on the date when annuity benefits
commence. In those states, the Company deducts the premium tax charge from the
Contract Value on that date. However, for Contracts subject to the premium tax
law of states which impose a premium tax on purchase payments when they are
made (currently South Dakota), the Company deducts the applicable premium tax
charge at the earliest of: a full or partial surrender of the Contract, the
date when annuity benefits commence, or payment of the Death Proceeds
(including application of the Death Proceeds to the Beneficiary Continuation
provision) upon the death of a Contract Owner (or of the Annuitant, if the
Contract is not owned in an individual capacity). To determine whether and
when a premium tax charge will be imposed on a Contract, the Company looks to
the state of residence of the Annuitant when a surrender is made, annuity
benefits commence or Death Proceeds are paid. The Company reserves the right
to impose a premium tax charge when a premium tax is incurred or at a later
date.
 
  Deductions for state premium tax charges currently range from 1/2% to 2.25%
of the Contract Value (or, if applicable, purchase payments or Death Proceeds)
for Contracts used with retirement plans qualifying for tax benefited
treatment under the Code and from 1% to 3.5% of the Contract Value (or, if
applicable, Death Proceeds) for all other Contracts. See Appendix C for a list
of premium tax rates. Premium tax rates are subject to being changed by law,
administrative interpretations or court decisions.
 
OTHER EXPENSES
 
  A deduction for an investment advisory fee is made from, and certain other
expenses are paid out of, the assets of each Eligible Fund. (See "Expense
Table.") The prospectus and Statement of Additional Information of the
Eligible Funds describe these deductions and expenses.
 
CHARGES UNDER CONTRACTS PURCHASED BY EXCHANGING A FUND I, PREFERENCE OR ZENITH
ACCUMULATOR CONTRACT
 
  If a Contract is purchased by exchanging a variable annuity contract issued
by New England Variable Annuity Fund I (a "Fund I contract"), by New England
Retirement Investment Account (a "Preference contract"), or by The New England
Variable Account (a "Zenith Accumulator contract") (each of which is now a
separate account of MetLife), the charges described above will apply except
that the sales charges will be calculated as described below.
   
  A Contract issued by exchanging a Fund I or Preference contract will have no
Contingent Deferred Sales Charge on assets transferred. Subsequent purchase
payments will be subject to the Contingent Deferred Sales Charge described
above. Assets transferred from the Fund I or Preference contract will be
treated as a purchase payment under the American Growth Series contract for
purposes of calculating the free withdrawal amount and Contingent Deferred
Sales Charge, but in no event will those assets be subject to the charge. A
comparison of the other fees and charges under an American Growth Series
Contract to those under a Fund I contract would also include the following:
Total asset-based charges (including the investment advisory fee) under the
Fund I contracts currently equal approximately 1.35%. Deductions for sales and
administrative expenses are made from ongoing purchase payments under the Fund
I contracts. Any applicable premium tax charges are deducted from purchase
payments in South Dakota. With respect to a Preference contract, a comparison
of fees and charges under an American Growth Series Contract to those under a
Preference contract would include the following: The Preference contracts have
a 1.25% asset-based charge for mortality and expense risks but do not have an
asset-based administration charge. The Preference contracts impose a $30
annual administration charge, but the charge is not limited to 2% of the
contract value as it is under the American Growth Series Contract, and there
is no waiver of the charge for contracts which reach certain asset levels as
there is under the American Growth Series Contract. There will be no
contingent deferred sales charge under the Preference contracts beginning in
the seventh contract year, and there is no limit on or charge for fund
transfers, although transfers are subject to a $25 minimum. Any applicable
premium tax charges are deducted from purchase payments in South Dakota.     
 
                                     A-33
<PAGE>
 
   
  In the case of a Contract issued by exchanging a Zenith Accumulator
contract, the assets transferred will be treated as a purchase payment under
the American Growth Series contract for purposes of calculating the free
withdrawal amount and Contingent Deferred Sales Charge under the American
Growth Series contract. However, if the transferred assets are surrendered
from the American Growth Series contract, they will be subject to the table of
declining contingent deferred sales charge percentages that would have applied
under the Zenith Accumulator contract in the year of the surrender. In the
case of an exchange of a Zenith Accumulator contract that has been outstanding
for less than three years, MetLife currently intends to waive any contingent
deferred sales charge applicable to the transferred assets if they are
surrendered more than seven years after the exchange. Following is a
comparison of other fees and charges under Zenith Accumulator contracts and
American Growth Series Contracts. The Zenith Accumulator contracts impose
1.35% in aggregate asset-based charges (the administration asset charge and
mortality and expense risk charge) and generally the same annual
administration contract charge as the American Growth Series Contracts, but
the annual administration contract charge under the Zenith Accumulator
contract is not limited to 2% of the contract value and is not waived for
contracts which reach certain asset levels, as it is under the American Growth
Series Contract. Under the Zenith Accumulator contract, the premium tax charge
is currently deducted from purchase payments in South Dakota. Transfers under
the Zenith Accumulator are not currently limited in number or amount prior to
annuitization, but a $10 fee is currently imposed for transfers in excess of
12 per year. The American Growth Series Contract imposes higher minimums for
amounts transferred from and remaining in a sub-account.     
 
  If you are contemplating an exchange of a Fund I, Preference or Zenith
Accumulator contract for an American Growth Series Contract, you should
compare all charges (including investment advisory fees) deducted under your
existing contract and under the American Growth Series Contract, as well as
the investment options offered by each. In addition, you should keep in mind
that the American Growth Series Contract may require a higher minimum for any
subsequent purchase payments you may wish to make, although the Company may
consent to waive the minimum to correspond to the terms of the old contract.
See "Purchase Payments--Exchange Offers" and "Payment on Death Prior to
Annuitization--Under Exchanged Contracts" for more information concerning the
consequences of an exchange.
 
                               ANNUITY PAYMENTS
 
ELECTION OF ANNUITY
 
  The Maturity Date of the Contract is based on the older of the Contract
Owner(s) and the Annuitant and is the date when that person, at his or her
nearest birthday, would be age 95 (or the maximum age allowed by state law).
If a Contract is acquired pursuant to an exchange from an old contract (see
"The Contracts--Purchase Payments"), the Maturity Date of the Contract would
be set at age 95 (or the maximum allowed by state law) regardless of what the
maturity date may have been for the old Contract. The Contract Owner may not
change the Maturity Date to an earlier date. However, the Contract Owner may
surrender the Contract at any time before the Maturity Date and apply the
surrender proceeds to an annuity payment option.
 
  If the Contract Owner and Annuitant are not the same and the Annuitant dies
prior to the Maturity Date, the Contract will continue for the benefit of the
Contingent Annuitant. The Maturity Date will be reset, if necessary, based on
the age of the older Contract Owner.
 
  Ownership of the Contract may not be changed without Company consent. If
ownership is changed, a change in the Maturity Date may be required, based on
the new Contract Owner's age. The new Maturity Date will be based on the older
of the new Contract Owner and the Annuitant and will be the date when that
person, at his or her nearest birthday, would be age 95 (or the maximum age
allowed by state law).
 
  The Contract that is issued to you will provide for variable annuity
payments to begin at the Maturity Date for the life of the Payee, but for at
least ten years. If you wish to change this annuity payment option you may do
so at any time prior to the Maturity Date. You may elect to have annuity
payments under a Contract made on a variable basis or on a fixed basis, or you
may designate a portion to be paid on a variable basis and a portion on a
fixed basis. If you select payments on a fixed basis, the amount of Contract
Value applied to the fixed payment option
 
                                     A-34
<PAGE>
 
(net of any applicable charges described under "Administration Charges,
Contingent Deferred Sales Charge and Other Deductions") will be transferred to
the general account of the Company, and the annuity payments will be fixed in
amount and duration by the annuity payment option selected, the age of the
Payee and, for Contracts issued in New York or Oregon for use in situations
not involving an employer-sponsored plan, by the sex of the Payee. (See
"Amount of Variable Annuity Payments.")
 
  Contracts acquired by retirement plans qualifying for tax benefited
treatment may be subject to various requirements concerning the time by which
benefit payments must commence, the period over which such payments may be
made, the annuity payment options that may be selected, and the minimum annual
amounts of such payments. Penalty taxes or other adverse tax consequences may
occur upon failure to meet such requirements.
 
ANNUITY OPTIONS
 
  The Contract provides several annuity payment options. Prior to the Maturity
Date you may elect to have the Contract Value applied to one of these payment
options at maturity. If you make a full or partial surrender of the Contract,
you may elect in your surrender request to apply the surrender proceeds to an
annuity payment option. You may also elect to have the Contract's Death
Proceeds applied to an annuity payment option, or, if the Death Proceeds
become payable and you have not previously elected a payment option, the
Beneficiary can elect to apply the Death Proceeds to an annuity payment
option; however, the Variable Income Payments to Age 100 Option and the
Variable Life Income for Two Lives Option, described below, and comparable
fixed options, are not available for this purpose.
 
  The selection of an annuity payment option must be made by written request
to the Company and is subject to any applicable Federal tax law restrictions.
The amount of the Death Proceeds or of the Contract Value at the Maturity Date
that is applied to an annuity payment option will be reduced by any applicable
premium tax charge. The Contract Value at the Maturity Date is also reduced by
a pro rata portion of the Administration Contract Charge and by any applicable
Contingent Deferred Sales Charge. The amount of Contract Value applied to an
annuity payment option at a full or partial surrender will be reduced by any
applicable Contingent Deferred Sales Charge and premium tax charge, and, on a
full surrender, by a pro rata portion of the Administration Contract Charge.
For Contracts with an outstanding loan, the amount of Contract Value or Death
Proceeds applied to an annuity payment option will be reduced by the amount of
the loan outstanding plus accrued interest.
 
  The Contract offers the variable annuity payment options listed below.
 
    Variable Income for a Specified Number of Years. The Company will make
  variable monthly payments for the number of years elected, which may not be
  more than 30 except with the consent of the Company.
 
    Variable Life Income. The Company will make variable monthly payments
  which will continue: while the Payee is living* ; while the Payee is living
  but for at least ten years; or while the Payee is living but for at least
  twenty years. (The latter two alternatives are referred to as Variable Life
  Income with Period Certain Option.)
 
    Variable Income Payments to Age 100 ("American Income Advantage"). The
  Company will make variable monthly payments for the number of whole years
  until the Payee is age 100. THIS OPTION CANNOT BE SELECTED FOR DEATH
  PROCEEDS.
 
    Variable Life Income for Two Lives. The Company will make variable
  monthly payments which will continue: while either of two Payees is living
  (Joint and Survivor Variable Life Income)*, while either of two Payees is
  living but for at least 10 years (Joint and Survivor Variable Life Income,
  10 Years Certain); while two Payees are living, and, after the death of one
  while the other is still living, two-thirds to the survivor (Joint and 2/3
  to Survivor Variable Life Income).* THIS OPTION CANNOT BE SELECTED FOR
  DEATH PROCEEDS.
- --------
* IT IS POSSIBLE UNDER THIS OPTION TO RECEIVE ONLY ONE VARIABLE ANNUITY
  PAYMENT IF THE PAYEE DIES (OR PAYEES DIE) BEFORE THE DUE DATE OF THE SECOND
  PAYMENT OR TO RECEIVE ONLY TWO VARIABLE ANNUITY PAYMENTS IF THE PAYEE DIES
  (OR PAYEES DIE) BEFORE THE DUE DATE OF THE THIRD PAYMENT, AND SO ON.
 
                                     A-35
<PAGE>
 
  Comparable fixed payment options are also available for all of the options
described above. In addition, other annuity payment options (including other
periods certain) may be available from time to time, and you should consult
the Company as to their availability. If you do not elect an annuity payment
option by the Maturity Date, variable payments under the Contract will be made
while the Payee is living but for at least ten years. (This is the Variable
Life Income with Period Certain Option.) If installments under an annuity
payment option would be less than the Company's published minimum, then the
Contract proceeds can be applied to an annuity payment option only with the
consent of the Company.
 
  The Payee under the Variable Income for a Specified Number of Years Option
or the Variable Income Payments to Age 100 Option may withdraw the commuted
value of the remaining payments. The Payee (or Payees) under the Variable Life
Income with Period Certain Option or the Joint and Survivor Variable Life
Income, 10 Years Certain Option may withdraw the commuted value of the
remaining period certain portion of the payment option. The commuted value of
such payments is calculated based on the assumed interest rate under the
Contract. The life income portion of the payment option cannot be commuted,
and variable annuity payments based on that portion will resume at the
expiration of the period certain if the Annuitant is alive at that time. (See
"Amount of Variable Annuity Payments.") Amounts applied to a fixed payment
option may not be withdrawn.
 
  The section of the prospectus entitled "Administration Charges, Contingent
Deferred Sales Charge and Other Deductions" describes whether a Contingent
Deferred Sales Charge will be deducted upon application of the Contract's
proceeds to a particular annuity payment option or upon withdrawal of the
commuted value of any payments certain under a variable payment option.
 
  Payees under the Variable Income for a Specified Number of Years Option or
the Variable Income Payments to Age 100 Option may convert to a variable
annuity payment option involving a life contingency.
 
  The availability of certain annuity payment options may be restricted on
account of Company policy and Federal tax law, which among other things, may
restrict payment to the life expectancy of the payee.
 
  The Company continues to assess the Mortality and Expense Risk Charge if
annuity payments are made under any variable annuity payment option (either
before or after the Maturity Date), including an option not involving a life
contingency and under which the Company bears no mortality risk.
 
                      AMOUNT OF VARIABLE ANNUITY PAYMENTS
 
  At the Maturity Date (or any other application of proceeds to a payment
option), the Contract Value (reduced by any applicable charges and by any
outstanding loan plus accrued interest) is applied toward the purchase of
monthly annuity payments. The amount of monthly variable annuity payments will
be determined on the basis of (i) annuity purchase rates not lower than the
rates set forth in the Life Income Tables contained in the Contract that
reflect the Payee's age, (ii) the assumed interest rate selected, (iii) the
type of payment option selected, and (iv) the investment performance of the
Eligible Funds selected. (The Fixed Account is not available under variable
payment options.) Current annuity purchase rates used to determine the amount
of monthly payments will generally be more favorable if the Maturity Date is
at least two Contract Years after the Contract Date. Current annuity purchase
rates may be changed by the Company periodically, and will be applied
prospectively on a non-discriminatory basis.
 
  The annuity purchase rates are used to calculate the basic payment level
purchased by the Contract Value. These rates vary according to the age of the
Payee. The higher the Payee's age at annuitization, the greater the basic
payment level under options involving life contingencies, because the Payee's
life expectancy and thus the period of anticipated income payments will be
shorter. With respect to Contracts issued in New York or Oregon for use in
situations not involving an employer-sponsored plan, purchase rates used to
calculate the basic payment level will also reflect the sex of the Payee.
Under such Contracts, a given Contract Value will produce a higher basic
payment level for a male Payee than for a female Payee, reflecting the longer
life expectancy of the female
 
                                     A-36
<PAGE>
 
Payee. If the Contract Owner has selected an annuity payment option that
guarantees that payments will be made for a certain number of years regardless
of whether the Payee remains alive, the Contract Value will purchase lower
monthly benefits than under a life contingent option.
 
  The dollar amount of the initial variable annuity payment will be at the
basic payment level. The assumed interest rate under the Contract will affect
both this basic payment level and the amount by which subsequent payments
increase or decrease. Each payment after the first will vary with the
difference between the net investment performance of the sub-accounts selected
and the assumed interest rate under the Contract. If the actual net investment
rate exceeds the assumed interest rate, the dollar amount of the annuity
payments will increase. Conversely, if the actual rate is less than the
assumed interest rate, the dollar amount of the annuity payments will
decrease. If actual investment performance is equal to the assumed interest
rate, the monthly payments will remain level.
 
  Unless otherwise provided, the assumed interest rate will be at an annual
effective rate of 3.5%. You may select as an alternative an assumed interest
rate equal to an annual effective rate of 0% or, if allowed by applicable law
or regulation, 5%. A higher assumed interest rate will produce a higher first
payment, a more slowly rising series of subsequent payments when the actual
net investment performance exceeds the assumed interest rate, and a more rapid
drop in subsequent payments when the actual net investment performance is less
than the assumed interest rate. A lower assumed interest rate will produce a
lower first payment, a more rapidly rising series of subsequent payments when
the actual net investment performance exceeds the assumed interest rate, and a
less rapid drop in subsequent payments when the actual net investment
performance is less than the assumed interest rate.
 
  You may, even after variable annuity payments have commenced, direct that
all or a portion of your investment in one sub-account be transferred to
another sub-account of the Variable Account in the manner provided under
"Transfer Privilege."
 
  The Company may require proof of age, sex (if applicable) and survival of
any person upon the continuation of whose life annuity payments depend.
 
  For more information regarding annuity payment options, you should refer to
the Statement of Additional Information and also to the Contract, which
contains detailed information about the various forms of annuity payment
options available, and other matters also of importance.
 
                RETIREMENT PLANS OFFERING FEDERAL TAX BENEFITS
 
  The Federal tax laws provide for a variety of retirement plans offering tax
benefits. These plans, which may be funded through the purchase of the
individual variable annuity contracts offered in this prospectus, include:
 
    1. Plans qualified under Section 401(a) or 403(a) of the Code ("Qualified
  Plans");
 
    2. Annuity purchase plans adopted by public school systems and certain
  tax-exempt organizations pursuant to Section 403(b) of the Code ("TSA
  Plans") which are funded solely by salary reduction contributions and which
  are not otherwise subject to ERISA;
 
    3. Individual retirement accounts, including Roth IRAs, adopted by or on
  behalf of individuals pursuant to Section 408(a) of the Code and individual
  retirement annuities purchased pursuant to Section 408(b) of the Code (both
  of which may be referred to as "IRAs"), including simplified employee
  pension plans and salary reduction simplified employee pension plans, which
  are specialized IRAs that meet the requirements of Section 408(k) of the
  Code ("SEPs" and "SARSEPs") and Simple Retirement Accounts under Section
  408(p) of the Code ("SIMPLE IRAs") and Roth Individual Retirement Accounts
  under Section 408A of the Code ("Roth IRAs");
 
    4. Eligible deferred compensation plans (within the meaning of Section
  457 of the Code) for employees of state and local governments and tax-
  exempt organizations ("Section 457 Plans"); and
 
                                     A-37
<PAGE>
 
    5. Governmental plans (within the meaning of Section 414(d) of the Code)
  for governmental employees, including Federal employees ("Governmental
  Plans").
 
  An investor should consult a qualified tax or other advisor as to the
suitability of a Contract as a funding vehicle for retirement plans qualifying
for tax benefited treatment, as to the rules underlying such plans and as to
the state and Federal tax aspects of such plans. In particular, the Contract
is not intended for use with TSA Plans that are subject to ERISA. The Company
will not provide all the administrative support appropriate for such plans.
Accordingly, the Contract should NOT be purchased for use with such plans. The
Company may make the Contract available for use with Section 401(k) plans.
 
  A summary of the Federal tax laws regarding contributions to, and
distributions from, the above tax benefited retirement plans may be found
below under "Federal Income Tax Status--Qualified Contracts." It should be
understood that should a tax benefited retirement plan lose its qualification
for tax-exempt status, employees will lose some of the tax benefits described
herein.
 
  In the case of certain TSA Plans under Section 403(b)(1) of the Code, IRAs
purchased under Section 408(b) of the Code and Roth IRAs under Section 408A of
the Code, the individual variable annuity contracts offered in this prospectus
comprise the retirement "plan" itself. These Contracts will be endorsed, if
necessary, to comply with Federal and state legislation governing such plans,
and such endorsements may alter certain Contract provisions described in this
prospectus. Refer to the Contracts and any endorsements for more complete
information.
 
                           FEDERAL INCOME TAX STATUS
 
INTRODUCTION
 
  The following discussion is a general discussion of federal income tax
considerations relating to the Contract and is not intended as tax advice.
This discussion is not intended to address the tax consequences resulting from
all of the situations in which a person may be entitled to or may receive a
distribution under the Contract. Any person concerned about these tax
implications should consult a competent tax advisor before initiating any
transaction. This discussion is based upon NELICO's understanding of the
present federal income tax laws as they are currently interpreted by the
Internal Revenue Service ("IRS"). No representation is made as to the
likelihood of the continuation of the present federal income tax laws or of
the current interpretation by the IRS. Moreover, no attempt has been made to
consider any applicable state or other tax laws.
 
  The Contract may be purchased on a non-tax qualified basis ("Non-Qualified
Contract") or purchased and used in connection with certain plans entitled to
special income tax treatment ("Qualified Contracts") under the Internal
Revenue Code of 1986, as amended (the "Code"). For purposes of this
prospectus, Qualified Contracts are Contracts that fund Qualified Plans, TSA
Plans, IRAs, SEPs and SARSEPs, SIMPLE IRAs, Roth IRAs, Section 457 Plans, and
Governmental Plans, as defined above under "Retirement Plans Offering Federal
Tax Benefits." The ultimate effect of federal income taxes on the amounts held
under a Contract, on annuity payments, and on the economic benefit to the
Contract Owner, the Annuitant, or the Beneficiary may depend on the type of
retirement plan, and on the tax status of the individual concerned. In
addition, certain requirements must be satisfied in purchasing a Qualified
Contract and receiving distributions from a Qualified Contract in order to
continue receiving favorable tax treatment. Therefore, purchasers of Qualified
Contracts should seek competent legal and tax advice regarding the suitability
of the Contract for their situation, the applicable requirements, and the tax
treatment of the rights and benefits of the Contract. The following discussion
assumes that a Qualified Contract is purchased with proceeds from and/or
contributions under retirement plans that qualify for the intended special
federal income tax treatment.
 
TAXATION OF THE COMPANY
 
  The Company is taxed as a life insurance company under Part I of Subchapter
L of the Code. Since the Variable Account is not an entity separate from the
Company, and its operations form a part of the Company, it will not be taxed
separately as a "regulated investment company" under Subchapter M of the Code.
Investment
 
                                     A-38
<PAGE>
 
income and realized capital gains arising from the operation of the Variable
Account are automatically applied to increase reserves under the Contracts.
Under existing federal income tax law, the Company believes that the Variable
Account's investment income and realized net capital gains will not be taxed
to the extent that such income and gains are applied to increase the reserves
under the Contracts.
 
  Accordingly, the Company does not anticipate that it will incur any federal
income tax liability attributable to the Variable Account and, therefore, the
Company does not intend to make provisions for any such taxes. However, if
changes in the federal tax laws or interpretations thereof result in the
Company being taxed on income or gains attributable to the Variable Account,
then the Company may impose a charge against the Variable Account (with
respect to some or all Contracts) in order to set aside amounts to pay such
taxes.
 
  The Company believes that the Contract will be subject to tax as an annuity
contract under the Code, which generally means that any increase in a
Contract's Account Value will not be taxable until amounts are received from
the Contract, either in the form of Annuity payments or in some other form. In
order to be subject to annuity contract treatment for tax purposes, the
Contract must meet the following Code requirements:
 
TAX STATUS OF THE CONTRACT
 
  Diversification. Section 817(h) of the Code requires that with respect to
Non-Qualified Contracts, the investments of the Funds must be "adequately
diversified" in accordance with Treasury regulations in order for the
Contracts to qualify as annuity contracts under federal tax law. The Variable
Account, through the Eligible Funds, intends to comply with the
diversification requirements prescribed by the Treasury in Reg. Sec. 1.817-5,
which affect how the Eligible Funds' assets may be invested.
 
  Owner Control. In certain circumstances, owners of variable annuity
contracts may be considered the owners, for federal income tax purposes, of
the assets of the separate accounts used to support their contracts. In those
circumstances, income and gains from the separate account assets would be
includible in the variable contract owner's gross income. The IRS has stated
in published rulings that a variable contract owner will be considered the
owner of separate account assets if the contract owner possesses incidents of
ownership in those assets, such as the ability to exercise investment control
over the assets. The Treasury Department has also announced, in connection
with the issuance of regulations concerning diversification, that those
regulations "do not provide guidance concerning the circumstances in which
investor control for the investments of a segregated asset account may cause
the investor [i.e., the Contract Owner], rather than the insurance company, to
be treated as the owner of the assets in the account." This announcement also
stated that guidance would be issued by way of regulations or rulings on the
"extent to which policyholders may direct their investments to particular Sub-
Accounts without being treated as owners of the underlying assets."
 
  The ownership rights under the Contract are similar to, but also different
in certain respects from, those described by the IRS in rulings in which it
was determined that contract owners were not owners of separate account
assets. For example, a Contract Owner has additional flexibility in allocating
premium payments and account values. These differences could result in a
Contract Owner being treated as the owner of a pro rata portion of the assets
of the Variable Account. In addition, the Company does not know what standards
will be set forth, if any, in the regulations or rulings which the Treasury
Department has stated it expects to issue. The Company therefore reserves the
right to modify the Contract as necessary to attempt to prevent a Contract
Owner from being considered the owner of a pro rata share of the assets of the
Variable Account.
 
  Required Distributions. In order to be treated as an annuity contract for
federal income tax purposes, section 72(s) of the Code requires Non-Qualified
Contracts to provide that (a) if any Owner dies on or after the annuity date
but prior to the time the entire interest in the Contract has been
distributed, the remaining portion of such interest will be distributed at
least as rapidly as under the method of distribution being used as of the date
of such owner's death; and (b) if any Owner dies prior to the annuity date,
the entire interest in the Contract will be distributed within five years
after the date of such Owner's death. These requirements will be considered
satisfied as to any portion of an owner's interest which is payable to or for
the benefit of a "designated beneficiary" and
 
                                     A-39
<PAGE>
 
which is distributed over the life of such "designated beneficiary" or over a
period not extending beyond the life expectancy of that beneficiary, provided
that such distributions begin within one year of the owner's death. The
"designated beneficiary" refers to a natural person designated by the owner as
a Beneficiary and to whom ownership of the contract passes by reason of death.
However, if the "designated beneficiary" is the surviving spouse of a deceased
owner, the contract may be continued with the surviving spouse as the new
owner.
 
  The Non-Qualified Contracts contain provisions which are intended to comply
with the requirements of section 72(s) of the Code, although no regulations
interpreting these requirements have yet been issued. The Company intends to
review such provisions when they are issued and modify the contracts in
question if necessary to assure that they comply with the requirements of Code
Section 72(s). Other rules may apply to Qualified Contracts.
 
  The following discussion is based on the assumption that the Contract
qualifies as an annuity contract for federal income tax purposes.
 
TAXATION OF ANNUITIES
 
  In General. Section 72 of the Code governs taxation of annuities in general.
The Company believes that a Contract Owner who is a natural person generally
is not taxed on increases in the value of a Contract until distribution occurs
by withdrawing all or part of the Contract Value (e.g., withdrawals or annuity
payments under the Annuity Option elected). For this purpose, the assignment,
pledge, or agreement to assign or pledge any portion of the Contract Value
(and in the case of a Qualified Contract, any portion of an interest in the
qualified plan) generally will be treated as a distribution. The taxable
portion of a distribution (in the form of a single sum payment or an annuity)
is taxable as ordinary income.
 
  The owner of any annuity contract who is not a natural person generally must
include in income any increase in the excess of the Contract Value over the
"investment in the contract" (discussed below) during the taxable year. There
are some exceptions to this rule and prospective Contract Owners that are not
natural persons may wish to discuss these with a competent tax advisor.
 
  The following discussion generally applies to a Contract owned by a natural
person.
 
  Surrenders. In the case of a surrender under a Qualified Contract, including
Systematic Withdrawals, a ratable portion of the amount received is taxable,
generally based on the ratio of the "investment in the contract" to the
individual's total accrued benefit under the retirement plan. The "investment
in the contract" generally equals the amount of any non-deductible purchase
payments paid by or on behalf of any individual. For a Contract issued in
connection with qualified plans, the "investment in the contract" can be zero.
Special tax rules may be available for certain distributions from a Qualified
Contract.
 
  With respect to Non-Qualified Contracts, partial surrenders, including
Systematic Withdrawals, are generally treated as taxable income to the extent
that the Contract Value immediately before the surrender exceeds the
"investment in the contract" at that time. Full surrenders are treated as
taxable income to the extent that the amount received exceeds the "investment
in the contract".
 
  Annuity Payments. Although the tax consequences may vary depending on the
annuity payment elected under the Contract, in general, only the portion of
the annuity payment that represents the amount by which the Contract Value
exceeds the "investment in the contract" will be taxed; after the "investment
in the contract" is recovered, the full amount of any additional annuity
payments is taxable. For variable annuity payments, the taxable portion is
generally determined by an equation that establishes a specific dollar amount
of each payment that is not taxed. The dollar amount is determined by dividing
the "investment in the contract" by the total number of expected periodic
payments. However, the entire distribution will be taxable once the recipient
has recovered the dollar amount of his or her "investment in the contract".
For fixed annuity payments, in general there is no tax on the portion of each
payment which represents the same ratio that the "investment in the contract"
bears to the total expected value of the annuity payments for the term of the
payments; however, the remainder of each annuity
 
                                     A-40
<PAGE>
 
payment is taxable. Once the "investment in the contract" has been fully
recovered, the full amount of any additional annuity payments is taxable. If
annuity payments cease as a result of an Annuitant's death before full
recovery of the "investment in the contract," consult a competent tax adviser
regarding deductibility of the unrecovered amount.
 
  Penalty Tax. In the case of a distribution pursuant to a Non-Qualified
Contract, there may be imposed a federal income tax penalty equal to 10% of
the amount treated as taxable income. In general, however, there is no penalty
tax on distributions: (1) made on or after the date on which the taxpayer
attains age 59 1/2; (2) made as a result of death or disability of an owner;
(3) received in substantially equal periodic payments as a life annuity or a
joint and survivor annuity for the lives or life expectancies of the owner and
a "designated beneficiary". Other tax penalties may apply to certain
distributions pursuant to a Qualified Contract.
 
  Taxation of Death Benefit Proceeds. Amounts may be distributed from the
Contract because of the death of a Contract Owner (or Annuitant if the
Contract Owner is not an individual). Generally, such amounts are includible
in the income of the recipient as follows: (1) if distributed in a lump sum,
they are taxed in the same manner as a full surrender as described above, or
(2) if distributed under an Annuity Option, they are taxed in the same manner
as annuity payments, as described above. For these purposes, the investment in
the Contract is not affected by the Owner's (or Annuitant's) death. That is,
the investment in the Contract remains the amount of any purchase payments
paid which were not excluded from gross income.
 
  Transfers, Assignments, Exchanges and Maturity Dates. A transfer of
ownership of a Contract, the designation of an Annuitant, Payee or other
Beneficiary who is not also an Owner, the selection of certain Maturity Dates,
the exchange of a Contract, or the receipt of a Contract in an exchange may
result in certain tax consequences that are not discussed herein. Anyone
contemplating any such designation, transfer, assignment, selection, or
exchange should contact a competent tax adviser with respect to the potential
tax effects of such a transaction.
 
  Multiple Contracts. All deferred non-qualified annuity contracts that are
issued by the Company (or its affiliates) to the same owner during any
calendar year are treated as one annuity contract for purposes of determining
the amount includible in gross income under section 72(e) of the Code. In
addition, the Treasury Department has specific authority to issue regulations
that prevent the avoidance of section 72(e) through the serial purchase of
annuity contracts or otherwise. Congress has also indicated that the Treasury
Department may have authority to treat the combination purchase of an
immediate annuity contract and separate deferred annuity contracts as a single
annuity contract under its general authority to prescribe rules as may be
necessary to enforce the income tax laws.
 
QUALIFIED CONTRACTS
 
  The Contract is designed for use with certain retirement plans that qualify
for Federal tax benefits. Such plans are defined above under the heading
"Retirement Plans Offering Federal Tax Benefits." The tax rules applicable to
participants and beneficiaries in these retirement plans vary according to the
type of plan and the terms and conditions of the plan. Special favorable tax
treatment may be available for certain types of contributions and
distributions. Adverse tax consequences may result from contributions in
excess of specified limits; distributions prior to age 59 1/2 (subject to
certain exceptions); distributions that do not conform to specified
commencement and minimum distribution rules; and in other specified
circumstances.
 
  The Company makes no attempt to provide more than general information about
use of the Contracts with the various types of retirement plans. Contract
Owners and participants under retirement plans as well as Annuitants and
Beneficiaries are cautioned that the rights of any person to any benefits
under these Contracts may be subject to the terms and conditions of the plans
themselves, regardless of the terms and conditions of the Contract issued in
connection with such a plan. Some retirement plans are subject to distribution
and other requirements that are not incorporated in the administration of the
Contracts. Adverse tax or other legal consequences to the plan, to the
participant or to both may result if the Contract is assigned or transferred
to any
 
                                     A-41
<PAGE>
 
individual as a means to provide benefit payments, unless the plan complies
with all legal requirements applicable to such benefits prior to transfer of
the Contract. Contract Owners are responsible for determining that
contributions, distributions and other transactions with respect to the
Contracts satisfy applicable law. Purchasers of Contracts for use with any
retirement plan should consult their legal counsel and tax adviser regarding
the suitability of the Contract under applicable federal and state tax laws
and ERISA.
 
  The sale of a Contract for use with an IRA may be subject to special
disclosure requirements of the Internal Revenue Service. Purchasers of a
Contract for use with IRAs will be provided with supplemental information
required by the Internal Revenue Service or other appropriate agency. Such
purchasers will have the right to revoke their purchase within seven days of
the earlier of the establishment of the IRA or their purchase. A Contract
issued in connection with an IRA will be amended as necessary to conform to
the requirements of the Code. Purchasers should seek competent advice as to
the suitability of the Contract for use with IRAs.
 
(i) Plan Contribution Limits
 
  Statutory limitations on contributions to retirement plans that qualify for
federal tax benefits may limit the amount of money that may be contributed to
the Contract in any Contract Year. Any purchase payments attributable to such
contributions may be tax deductible to the employer and are not currently
taxable to the Annuitants for whom the Contracts are purchased. The
contributions to the Contract and any increase in Contract Value attributable
to such contributions are not subject to taxation until payments from the
Contract are made to the Annuitant or his/her Beneficiaries.
 
  TSA PLANS
 
  Purchase payments attributable to TSA Plans are not includible within the
Annuitant's income to the extent such purchase payments do not exceed certain
statutory limitations, including the "exclusion allowance." The exclusion
allowance is a calculation which takes into consideration the Annuitant's
includible compensation, number of years of service, and prior years of
contributions. For more information about all the applicable limitations, the
Annuitant should obtain a copy of IRS Publication 571 on TSA Programs for
Employees of Public Schools and Certain Tax Exempt Organizations which will
better assist the Annuitant in calculating the exclusion allowance and other
limitations to which he or she may be subject for any given tax year. Any
purchase payments attributable to permissible contributions under Code Section
403(b) (and earnings thereon) are not taxable to the Annuitant until amounts
are distributed from the Contract. However, these payments may be subject to
FICA (Social Security) taxes.
 
  The Contract includes a Death benefit that in some cases may exceed the
greater of the Purchase Payments or the Contract Value. The Death benefit
could be characterized as an incidental benefit, the amount of which is
limited in any tax-sheltered annuity under section 403(b). Because the Death
benefit may exceed this limitation, employers using the Contract in connection
with such plans should consult their tax adviser.
 
  IRAS, SEPS, SARSEPS, SIMPLE IRAS AND ROTH IRAS
 
  The maximum tax deductible purchase payment which may be contributed each
year to an IRA is the lesser of $2,000 or 100 percent of includible
compensation if the taxpayer is not covered under an employer plan. A spousal
IRA is available if the taxpayer and spouse file a joint return and the spouse
is not yet age 70 1/2. The maximum tax deductible purchase payment which a
taxpayer may make to a spousal IRA is $2,000. If covered under an employer
plan, taxpayers are permitted to make deductible purchase payments; however,
for 1998 the deductions are phased out and eventually eliminated, on a pro
rata basis, for adjusted gross income between $30,000 and $40,000 for an
individual, between $50,000 and $60,000 for the covered spouse of a married
couple filing jointly, between $150,000 and $160,000 for the non-covered
spouse of a married couple filing jointly, and between $0 and $10,000 for a
married person filing separately. A taxpayer may also make nondeductible
purchase payments. However, the total of deductible and nondeductible purchase
payments may not exceed the limits described above for deductible payments. An
IRA is also the vehicle that receives contributions to SEPs, SARSEPs
 
                                     A-42
<PAGE>
 
and SIMPLE IRAs. Maximum contributions (including elective deferrals) to SEPs
and SARSEPs are currently limited to the lesser of 15% of compensation
(generally up to $160,000 for 1998) or $30,000. The maximum salary reduction
contribution currently permitted to a SIMPLE IRA is $6,000. In addition, an
employer may make a matching contribution to a SIMPLE IRA, typically of 2% or
3% of the compensation (as limited by the Code) of the employee. For more
information concerning the contributions to IRAs, SEPs, SARSEPs, and SIMPLE
IRAs you should obtain a copy of IRS Publication 590 on Individual Retirement
Accounts. In addition to the above, an individual may make a "rollover"
contribution into an IRA with the proceeds of a "lump sum" distribution (as
defined in the Code) from a Qualified Plan.
 
  ROTH IRAS
 
  Effective January 1, 1998, section 408A of the Code permits certain eligible
individuals to contribute to a Roth IRA. Contributions to a Roth IRA, which
are subject to certain limitations, are not deductible and must be made in
cash or as a rollover or transfer from another Roth IRA or other IRA. A
rollover from or conversion of an IRA to a Roth IRA may be subject to tax and
other special rules may apply. The maximum purchase payment which may be
contributed each year to a Roth IRA is the lesser of $2,000 or 100 percent of
includible compensation. A spousal Roth IRA is available if the taxpayer and
spouse file a joint return. The maximum purchase payment that a taxpayer may
make to a spousal Roth IRA is $2,000. Except in the case of a rollover or a
transfer, no more than $2,000 can be contributed in aggregate to all IRAs and
Roth IRAs of either spouse during any tax year. The Roth IRA contribution may
be limited to less than $2,000 depending on the taxpayer's adjusted gross
income ("AGI"). The maximum contribution begins to phase out if the taxpayer
is single and the taxpayer's AGI is more than $95,000 or if the taxpayer is
married and files a joint tax return and the taxpayer's AGI is more than
$150,000. The taxpayer may not contribute to a Roth IRA if the taxpayer's AGI
is over $110,000 (if the taxpayer is single), $160,000 (if the taxpayer is
married and files a joint tax return), or $10,000 (if the taxpayer is married
and files separate tax returns).You should consult a tax adviser before
combining any converted amounts with any other Roth IRA contributions,
including any other conversion amounts from other tax years.
 
  SECTION 457 PLANS
 
  Generally, under a Section 457 Plan, an employee or executive may defer
income under a written agreement in an amount equal to the lesser of 33 1/3%
of includible compensation or $8,000. The amounts so deferred (including
earnings thereon) by an employee or executive electing to contribute to a
Section 457 Plan are includible in gross income only in the tax year in which
such amounts are paid or made available to that employee or executive or
his/her Beneficiary. With respect to a Section 457 Plan for a nonprofit
organization other than a governmental entity, (i) once contributed to the
plan, any Contracts purchased with employee contributions remain the sole
property of the employer and may be subject to the general creditors of the
employer and (ii) the employer retains all ownership rights to the Contract
including voting and redemption rights which may accrue to the Contract(s)
issued under the plan. The Plans may permit participants to specify the form
of investment for their deferred compensation accounts. Depending on the terms
of the particular plan, a non-governmental employer may be entitled to draw on
deferred amounts for purposes unrelated to its Section 457 Plan obligations.
 
  QUALIFIED PLANS
 
  Code section 401(a) permits employers to establish various types of
retirement plans for employees, and permit self-employed individuals to
establish retirement plans for themselves and their employees. These
retirement plans may permit the purchase of the Contracts to accumulate
retirement savings under the plans. Adverse tax consequences to the plan, to
the participant or to both may result if this Contract is assigned or
transferred to any individual as a means to provide benefit payments.
 
  The Contract includes a Death benefit that in some cases may exceed the
greater of the Purchase Payments or the Contract Value. The Death benefit
could be characterized as an incidental benefit, the amount of which is
limited in any pension or profit-sharing plan. Because the Death benefit may
exceed this limitation, employers using the Contract in connection with such
plans should consult their tax adviser.
 
                                     A-43
<PAGE>
 
(ii) Distributions from the Contract
 
  MANDATORY WITHHOLDING ON CERTAIN DISTRIBUTIONS
 
  Distributions called "eligible rollover distributions" from Qualified Plans
and from many TSA Plans are subject to mandatory withholding by the plan or
payor at the rate of 20%. An eligible rollover distribution is the taxable
portion of any distribution from a Qualified Plan or a TSA Plan, except for
certain distributions such as distributions required by the Code or in a
specified annuity form. Withholding can be avoided by arranging a direct
transfer of the eligible rollover distribution to a Qualified Plan, TSA or
IRA.
 
  QUALIFIED PLANS, TSA PLANS, IRAS, SEPS, SARSEPS, SIMPLE IRAS, ROTH IRAS AND
GOVERNMENTAL PLANS
 
  Payments made from the Contracts held under a Qualified Plan, TSA Plan, IRA,
SEP, SARSEP, SIMPLE IRA or Governmental Plan are taxable under Section 72 of
the Code as ordinary income, in the year of receipt. Any amount received in
surrender of all or part of the Contract Value prior to annuitization will,
subject to restrictions and penalties discussed below, also be included in
income in the year of receipt. If there is any "investment" in the Contract, a
portion of each amount received is excluded from gross income as a return of
such investment. Distributions or withdrawals prior to age 59 1/2 may be
subject to a penalty tax of 10% of the amount includible in income. This
penalty tax does not apply: (i) to distributions of excess contributions or
deferrals; (ii) to distributions made on account of the Annuitant's death,
retirement, disability or early retirement at or after age 55; (iii) when
distribution from the Contract is in the form of an annuity over the life or
life expectancy of the Annuitant (or joint lives or life expectancies of the
Annuitant and his or her Beneficiary); or (iv) when distribution is made
pursuant to a divorce (in the case of IRAs) or a qualified domestic relations
order. In the case of IRAs, SEPs, SARSEPs and SIMPLE IRAs, the exceptions for
distributions on account of early retirement at or after age 55 or made
pursuant to a qualified domestic relations order do not apply. A tax-free
rollover may be made once each year among individual retirement arrangements
subject to the conditions and limitations described in the Code.
 
  Distributions from a Roth IRA generally are not taxed, except that, once
aggregate distributions exceed contributions to the Roth IRA, income tax and a
10% penalty tax may apply to distributions made (1) before age 59 1/2 (subject
to certain exceptions) or (2) during the five taxable years starting with the
year in which the first contribution is made to the Roth IRA.
 
  Except under a Roth IRA, if the Annuitant dies before distributions begin,
distributions must be completed within five years after death, unless payments
begin within one year after death and are made over the life (or life
expectancy) of the Beneficiary. If the Annuitant's spouse is the Beneficiary,
distributions need not begin until the Annuitant would have reached age 70
1/2. If the Annuitant dies after annuity payments have begun, payments must
continue to be made at least as rapidly as payments made before death.
 
  With respect to TSA Plans, elective contributions to the Contract made after
December 31, 1988 and any increases in Contract Value after that date may not
be distributed prior to attaining age 59 1/2, termination of employment, death
or disability. Contributions (but not earnings) made after December 31, 1988
may also be distributed by reason of financial hardship. These restrictions on
withdrawal will not apply to the Contract Value as of December 31, 1988. These
restrictions are not expected to change the circumstances under which
transfers to other investments which qualify for tax free treatment under
Section 403(b) of the Code may be made.
 
  With respect to a SIMPLE IRA, the 10% penalty tax described above is
increased to 25% with respect to withdrawals made during the first two years
of participation. With respect to Roth IRAs, distributions representing
amounts attributable to contributions to a Roth IRA which has been established
for five years or more are generally not taxed.
 
  Except under a Roth IRA, annuity payments, periodic payments or annual
distributions generally must commence by April 1 of the calendar year
following the year in which the Annuitant attains age 70 1/2. In the case of a
Qualified Plan or a Governmental Plan, if the Annuitant is not a "five-percent
owner" as defined in the Code,
 
                                     A-44
<PAGE>
 
these distributions must begin by the later of the date determined by the
preceding sentence or the year in which the Annuitant retires. Each annual
distribution must equal or exceed a "minimum distribution amount" which is
determined by minimum distribution rules under the plan. The Company currently
waives the Contingent Deferred Sales Charge on distributions that are intended
to satisfy required minimum distributions, calculated as if this Contract were
the participant's only retirement plan asset. This waiver only applies if the
required minimum distribution exceeds the free withdrawal amount and no
previous surrenders were made during the Contract Year. Rules regarding
required minimum distributions apply to IRAs (including SEP, SARSEPs and
SIMPLEs), Qualified Plans, TSA Plans and Governmental Plans. Roth IRAs under
Section 408A do not require distributions at any time prior to the Contract
Owner's death. A penalty tax of up to 50% of the amount which should have been
distributed may be imposed by the IRS for failure to distribute the required
minimum distribution amount.
 
  Other restrictions with respect to the election, commencement, or
distribution of benefits may apply under the Contracts or under the terms of
the Qualified Plans in respect of which the Contracts are issued.
 
  SECTION 457 PLANS
 
  When a distribution under a Contract held under a Section 457 Plan is made
to the Annuitant, such amounts are taxed as ordinary income in the year in
which received. The plan must not permit distributions prior to the
Annuitant's separation from service (except in the case of unforeseen
emergency).
 
  Generally, annuity payments, periodic payments or annual distributions must
commence by the later of April 1 of the calendar year following the year in
which the Annuitant attains age 70 1/2 or the year of retirement, and meets
other distribution requirements. Minimum distributions under a Section 457
Plan may be further deferred if the Annuitant remains employed with the
sponsoring employer. Each annual distribution must equal or exceed a "minimum
distribution amount" which is determined by distribution rules under the plan.
If the Annuitant dies before distributions begin, the same special
distribution rules apply in the case of Section 457 Plans as apply in the case
of Qualified Plans, TSA Plans, IRAs, SEPs, SARSEPs, generally SIMPLE IRAs and
Governmental Plans. These rules are discussed above in the immediately
preceding section of this prospectus.
 
WITHHOLDING
 
  Pension and annuity distributions generally are subject to withholding for
the recipient's federal income tax liability at rates that vary according to
the type of distribution and the recipient's tax status. Recipients, however,
generally are provided the opportunity to elect not to have tax withheld from
distributions. The Company is required to withhold taxes from certain
distributions under certain qualified contracts.
 
POSSIBLE CHANGES IN TAXATION
 
  Although the likelihood of legislative change is uncertain, there is always
the possibility that the tax treatment of the Contracts could change by
legislation or other means. For instance, the President's 1999 Budget Proposal
recommended legislation that, if enacted, would adversely modify the federal
taxation of the Contracts. It is also possible that any change could be
retroactive (that is, effective prior to the date of the change). A tax
adviser should be consulted with respect to legislative developments and their
effect on the Contract.
 
OTHER TAX CONSEQUENCES
 
  As noted above, the foregoing discussion of the federal income tax
consequences is not exhaustive and special rules are provided with respect to
other tax situations not discussed in this Prospectus. Further, the federal
income tax consequences discussed herein reflect the Company's understanding
of the current law and the law may change. Federal estate and gift tax
consequences of ownership or receipt of distributions under the Contract
depend on the individual circumstances of each Contract Owner or recipient of
a distribution. A competent tax advisor should be consulted for further
information.
 
                                     A-45
<PAGE>
 
GENERAL
 
  At the time the initial purchase payment is paid, a prospective purchaser
must specify whether he or she is purchasing a Non-Qualified Contract or a
Qualified Contract. If the initial premium is derived from an exchange or
surrender of another annuity contract, the Company may require that the
prospective purchaser provide information with regard to the federal income
tax status of the previous annuity contract. The Company will require that
persons purchase separate Contracts if they desire to invest monies qualifying
for different annuity tax treatment under the Code. Each such separate
Contract would require the minimum initial purchase payment stated above.
Additional purchase payments under a Contract must qualify for the same
federal income tax treatment as the initial purchase payment under the
Contract; the Company will not accept an additional purchase payment under a
Contract if the federal income tax treatment of such purchase payment would be
different from that of the initial purchase payment.
 
                                 VOTING RIGHTS
 
  The Company is the legal owner of the Eligible Fund shares held in the
Variable Account and has the right to vote those shares at meetings of the
Eligible Fund shareholders. However, to the extent required by Federal
securities law, the Company will give you, as Contract Owner, the right to
instruct the Company how to vote the shares that are attributable to your
Contract.
 
  Prior to annuitization, the number of votes as to which you have a right of
instruction is determined by applying your percentage interest in a sub-
account to the total number of votes attributable to the sub-account. After
annuitization, the number of votes attributable to your Contract is determined
by applying the percentage interest reflected by the reserve for your Contract
to the total number of votes attributable to the sub-account. After
annuitization the votes attributable to your Contract decrease as reserves
underlying the Contract decrease.
 
  Contract Owners who are entitled to give voting instructions and the number
of shares as to which they have a right of instruction will be determined as
of the record date for the meeting. All Eligible Fund shares held in any sub-
account of the Variable Account or any other registered (or to the extent
voting privileges are granted by the issuing insurance company, unregistered)
separate accounts of the Company or any affiliate for which no timely
instructions are received will be voted for, against, or withheld from voting
on any proposition in the same proportion as the shares held in that sub-
account for all policies or contracts for which voting instructions are
received.
 
  All Eligible Fund shares held by the general investment account (or any
unregistered separate account for which voting privileges are not extended) of
the Company or its affiliates will be voted in the same proportion as the
aggregate of (i) the shares for which voting instructions are received and
(ii) the shares that are voted in proportion to such voting instructions.
 
  The SEC requires the Eligible Funds' Board of Trustees to monitor events to
identify conflicts that may arise from the sale of shares to variable life and
variable annuity separate accounts of affiliated and, if applicable,
unaffiliated insurance companies. Conflicts could arise as a result of changes
in state insurance law or Federal income tax law, changes in investment
management of any portfolio of the Eligible Funds, or differences between
voting instructions given by variable life and variable annuity contract
owners, for example. If there is a material conflict, the Boards of Trustees
will have an obligation to determine what action should be taken, including
the removal of the affected sub-account(s) from the Eligible Fund(s), if
necessary. If the Company believes any Eligible Fund action is insufficient,
the Company will consider taking other action to protect Contract Owners.
There could, however, be unavoidable delays or interruptions of operations of
the Variable Account that the Company may be unable to remedy.
 
                                     A-46
<PAGE>
 
                           DISTRIBUTION OF CONTRACTS
 
  New England Securities, the principal underwriter of the Contracts, is a
broker-dealer registered under the Securities Exchange Act of 1934 (the
"Exchange Act") and a member of the National Association of Securities
Dealers, Inc. New England Securities may enter into selling agreements with
other broker-dealers registered under the Exchange Act whose registered
representatives are authorized under applicable law to sell variable annuity
contracts. The Company will pay compensation to the New England Securities
registered representatives or other broker-dealers involved in the sale of a
Contract (including the exchange of a Fund I or Preference contract). Such
compensation will generally have a present value that does not exceed 7% of
purchase payments under the Contract (although a lower amount may be paid in
certain circumstances, such as sales of the Contracts to a person over age
75), and such compensation may be paid either as a percentage of purchase
payments at the time the Company receives them, as a percentage of Contract
Value on an ongoing basis, or in some combination of both. No commission is
paid in connection with the initial issuance of a Contract as a result of an
exchange from a Zenith Accumulator contract, although the Company reserves the
right to pay a flat servicing or handling fee--not to be deducted from
Contract Value--in connection with such exchanges.
 
                               THE FIXED ACCOUNT
 
  A Fixed Account option is included under Contracts issued in those states
where it has been approved by the state insurance department. In these states,
you may allocate net purchase payments and may transfer Contract Value in the
Variable Account to the Fixed Account, which is part of the Company's general
account. The Fixed Account offers diversification to a Variable Account
contract, allowing the Contract Owner to protect principal and earn, at least,
a guaranteed rate of interest.
 
  Because of exemptive and exclusionary provisions, interests in the Fixed
Account have not been registered under the Securities Act of 1933, and neither
the Fixed Account nor the general account has been registered as an investment
company under the Investment Company Act of 1940. Therefore, neither the
general account, the Fixed Account nor any interests therein are generally
subject to the provisions of these Acts, and the Company has been advised that
the staff of the Securities and Exchange Commission does not review
disclosures relating to the general account. Disclosures regarding the Fixed
Account may, however, be subject to certain generally applicable provisions of
the Federal securities laws relating to the accuracy and completeness of
statements made in prospectuses.
 
GENERAL DESCRIPTION OF THE FIXED ACCOUNT
 
  The Company's general account consists of all assets owned by the Company
other than those in the Variable Account and the Company's other separate
accounts. The Company has sole discretion over the investment of assets in the
general account, including those in the Fixed Account. Contract Owners do not
share in the actual investment experience of the assets in the Fixed Account.
Instead, the Company guarantees that Contract Values in the Fixed Account will
be credited with interest at an effective annual rate of at least 3%. The
Company is not obligated to credit interest at a rate higher than 3%, although
in its sole discretion it may do so. Contract Values in the Fixed Account will
be credited with interest daily.
 
  Any purchase payment or portion of Contract Value ("deposit") allocated to
the Fixed Account will earn interest at an annual rate determined by the
Company for that deposit for a 12 month period. At the end of each succeeding
12 month period, the Company will determine the interest rate that will apply
to that deposit plus accrued interest for the next 12 months. This renewal
rate may differ from the interest rate that is applied to new deposits made to
the Fixed Account on that same day. (See "Contract Value and Fixed Account
Transactions" below for a description of the interest rate that will be
applied to Contract loan repayments allocated to the Fixed Account.)
 
                                     A-47
<PAGE>
 
CONTRACT VALUE AND FIXED ACCOUNT TRANSACTIONS
 
  A Contract's total Contract Value will include its Contract Value in the
Variable Account, in the Fixed Account and, for Contracts under which Contract
loans are available, any of its Contract Value held in the Company's general
account (but outside the Fixed Account) as the result of a Contract loan.
 
  Unless you request otherwise, a partial surrender will reduce the Contract
Value in the sub-accounts of the Variable Account and the Fixed Account
proportionately. The annual Administration Contract Charge will be deducted
entirely from the Contract Value in the Variable Account, and not from the
Contract Value in the Fixed Account or the Company's general account as the
result of a loan. (However, that charge is limited to the lesser of $30 and 2%
of the total Contract Value, including Contract Value you have allocated to
the Fixed Account and any Contract Value held in the Company's general account
as the result of a loan.) Except as described below, amounts in the Fixed
Account are subject to the same rights and limitations as are amounts in the
Variable Account with respect to transfers, surrenders and partial surrenders.
The following special rules apply to transfers involving the Fixed Account.
 
  The amount of Contract Value which may be transferred from the Fixed Account
is limited to the greater of: 25% of the Contract Value in the Fixed Account
at the end of the first day of the Contract Year, and the amount of Contract
Value that was transferred from the Fixed Account in the previous Contract
Year, except with the consent of the Company. However these limits do not
apply to new deposits to the Fixed Account for which the dollar cost averaging
program has been elected within 30 days from the date of the deposit. In such
case, the amount of Contract Value which may be transferred from the Fixed
Account will be the greatest of: a) 25% of the Contract Value in the Fixed
Account at the end of the first day of the Contract Year; b) the amount of
Contract Value that was transferred from the Fixed Account in the previous
Contract Year; or c) the amount of Contract Value in the Fixed Account to be
transferred out of the Fixed Account under dollar cost averaging elected on
new deposits within 30 days from the date of deposit. The Company allows one
dollar cost averaging program to be active at a time. Therefore, if you
transfer pre-existing assets (corresponding to Contract Value for which the
dollar cost averaging program was not elected within 30 days from the date of
each deposit) out of the Fixed Account under the dollar cost averaging program
and would like to transfer up to 100% of new deposits under the program, then
the dollar cost averaging program on the pre-existing assets will be canceled
and a new program will begin with respect to new deposits. In this case, the
pre-existing assets may still be transferred out of the Fixed Account,
however, not under a dollar cost averaging program, subject to the limitations
on transfers generally out of the Fixed Account. (Also, after the transfer is
made, the Contract Value may not be allocated among more than ten of the sub-
accounts and/or the Fixed Account.) The Company intends to restrict purchase
payments and transfers of Contract Value into the Fixed Account: (1) if the
interest rate which would be credited to the deposit would be equivalent to an
annual effective rate of 3%; or (2) if the total Contract Value in the Fixed
Account exceeds a maximum amount published by the Company (currently
$500,000). (For Contracts issued in Maryland, the Company reserves the right
to restrict such purchase payments and transfers if the total Contract Value
in the Fixed Account equals or exceeds $500,000.) In addition, the Company
intends to restrict transfers of Contract Value into the Fixed Account, and
reserves the right to restrict purchase payments and loan prepayments into the
Fixed Account, for 180 days following a transfer or loan out of the Fixed
Account.
 
  Amounts transferred to the sub-accounts from the Fixed Account will be on a
"last-in, first-out" basis; that is, they will be made in the reverse order in
which the deposits into the Fixed Account were made. Amounts surrendered from
the Fixed Account will be on a "first-in, first-out" basis. Amounts withdrawn
from the Fixed Account due to a Contract loan will be on a "last-in, first-
out" basis.
 
  If any portion of a Contract loan was attributable to Contract Value in the
Fixed Account, then an equal portion of each loan repayment must be allocated
to the Fixed Account. (For example, if 50% of the loan was attributable to
your Fixed Account Contract Value, then 50% of each loan repayment will be
allocated to the Fixed Account.) Similarly, unless you request otherwise, the
balance of the loan repayment will be allocated to the sub-accounts in the
same proportions in which the loan was attributable to the sub-accounts. See
"Loan Provision for Certain Tax Benefited Retirement Plans." The rate of
interest for each loan repayment applied to the Fixed Account will be the
 
                                     A-48
<PAGE>
 
lesser of: (1) the rate the borrowed money was receiving at the time the loan
was made from the Fixed Account; and (2) the interest rate set by the Company
in advance for that date. If the loan is being prepaid, however, and
prepayments into the Fixed Account are restricted as described above, the
portion of the loan prepayment that would have been allocated to the Fixed
Account will be allocated to the Zenith Back Bay Advisors Money Market Sub-
account instead.
 
  The Company reserves the right to delay transfers, surrenders, partial
surrenders and Contract loans from the Fixed Account for up to six months.
 
  Like all financial services providers, NELICO utilizes systems that may be
affected by Year 2000 transition issues, and it relies on a number of third
parties including banks, custodians, and investment managers, that also may be
affected. NELICO and its affiliates have developed, and are in the process of
implementing, a Year 2000 transition plan, and are confirming that their
service providers are also so engaged. The resources that are being devoted to
this effort are substantial. It is difficult to predict with precision whether
the amount of resources ultimately devoted, or the outcome of these efforts,
will have any negative impact on NELICO. However, as of the date of this
prospectus, it is not anticipated that Owners will experience negative effects
on their investment, or on the services provided in connection therewith, as
result of Year 2000 transition implementation. NELICO currently anticipates
that its systems will be Year 2000 compliant on or about December 31, 1998,
with systems testing and compliance verification to follow. There can,
however, be no assurance that the other service providers have anticipated
every step necessary to avoid any adverse effect on the Variable Account
attributable to Year 2000 transition.
 
                             FINANCIAL STATEMENTS
 
  The financial statements of the Company and the Variable Account may be
found in the Statement of Additional Information.
 
                       INVESTMENT EXPERIENCE INFORMATION
 
  The Company may advertise performance by illustrating hypothetical average
annual total returns for each sub-account of the Variable Account, based on
the actual investment experience of the Eligible Funds since their inception
and for the year-to-date, one, three, five, and ten year periods ending with
the date of the illustration. Such performance information will be accompanied
by SEC standard performance information for each sub-account, based on the
actual investment experience of the sub-account since its inception and for
the one, five, and ten year periods ending with the date of the information
shown. Calculations of average annual total return are based on the assumption
that a single investment of $1,000 was made at the beginning of each period
illustrated. Average annual total return calculations reflect changes in the
net asset values of the Eligible Funds plus the reinvestment of dividends from
net investment income and of distributions from net realized gains, if any.
The calculations also reflect the deduction of the Mortality and Expense Risk
Charge and the Administration Asset Charge. They also reflect annual
deductions for the Administration Contract Charge, and the deduction of any
Contingent Deferred Sales Charge applicable at the end of the period
illustrated. The calculations do not reflect the effect of any premium tax
charge, which applies in certain states, and which would reduce the results
shown. The average annual total return is the annual compounded rate of return
which would produce the surrender value at the end of the period illustrated.
See "Calculation of Performance Data" in the Statement of Additional
Information for average annual total returns as of December 31, 1997 and more
information about how they are calculated.
 
  The Company may also illustrate how the average annual total return for a
five year period was determined by illustrating the average annual total
return for each year in the five year period ending with the date of the
illustration. Such illustrations are based on the same assumptions and reflect
the same expenses and deductions described in the preceding paragraph. See
"Calculation of Performance Data" in the Statement of Additional Information
for an example of this type of illustration and more information about how
average annual total returns are calculated.
 
                                     A-49
<PAGE>
 
  The Company may illustrate what would have been the growth and value of a
single $10,000 purchase payment for the Contract if it had been invested in
each of the Eligible Funds on the first day of the first month after those
Eligible Funds commenced operations. These illustrations show Contract Value
and surrender value, calculated in the same manner as when they are used to
arrive at average annual total return, as of the end of each year, ending with
the date of the illustration. The surrender values reflect the deduction of
any applicable Contingent Deferred Sales Charge, but do not reflect the
deduction of any premium tax charge. These illustrations may also show annual
percentage changes in Contract Value and surrender value, cumulative returns,
and annual effective rates of return. The difference between the Contract
Value or surrender value at the beginning and at the end of each year is
divided by the beginning Contract Value or surrender value to arrive at the
annual percentage change. The cumulative return is determined by taking the
difference between the $10,000 investment and the ending Contract Value or
surrender value and dividing it by $10,000. The annual effective rate of
return is calculated in the same manner as average annual total return. See
"Calculation of Performance Data" in the Statement of Additional Information
for examples of these illustrations and more information about how they are
calculated.
 
  The Variable Account may update the performance history of one or more of
its sub-accounts on a quarterly basis by illustrating the one, three, five,
and ten year values (or since inception, if less) of a single $10,000 purchase
payment invested at the beginning of such periods using the same method of
calculation described in the preceding paragraph, but using the periods ending
with the date of the quarterly illustration. Such illustrations will show the
Contract Value at the end of the period and the cumulative return and annual
effective rate of return for the period. The illustration may also include the
cumulative return and annual effective rate of return of an appropriate
securities index and the Consumer Price Index for the same period.
 
  The Company may illustrate what would have been the change in value of a
$250 monthly purchase payment plan if the monthly payments had been invested
in each of the Eligible Funds on the first day of each month starting with the
first day of the first month after those Eligible Funds commenced operations.
These illustrations show cumulative payments, Contract Value and surrender
value as of the end of each year, ending with the date of the illustration.
Surrender values reflect the deduction of any applicable Contingent Deferred
Sales Charge. The illustrations also show annual effective rates of return,
which represent the compounded annual rates that the hypothetical purchase
payments would have had to earn in order to produce the Contract Value and
surrender value as of the date of the illustration. See "Calculation of
Performance Data" in the Statement of Additional Information for examples of
these illustrations and more information about how they are calculated.
 
  The Variable Account may make available illustrations showing historical
Contract Values and the annual effective rate of return, based upon
hypothetical purchase payment amounts and frequencies, which can be selected
by the client. The method of calculation described in the preceding paragraph
will be used, but the illustration will reflect the effect of any premium tax
charge applicable in the state where the illustration is delivered. The
beginning date of the illustration can be selected by the client. Contract
Values will be shown as of the end of each calendar year in the period and as
of the end of the most recent calendar quarter.
 
  Historical investment performance may also be illustrated by showing the
percentage change in the Accumulation Unit Value and annual effective rate of
return of a sub-account without reflecting the deduction of any Contingent
Deferred Sales Charge, premium tax charge, or the annual $30 Administration
Contract Charge, all of which have the effect of reducing historical
performance. The percentage change in unit value and annual effective rate of
return of each sub-account may be shown from inception of the Eligible Fund to
the date of the report and for the year-to-date, one, three, five, and ten
year periods ending with the date of the report. The percentage change in unit
value and annual effective rate of return also may be compared with the
percentage change and annual effective rate for the Dow Jones Industrial
Average and S&P 500 Stock Index, as well as other unmanaged indices of stock
and bond performance described in the Statement of Additional Information in
the Notes to the illustration of Annual Percentage Change in Contract Value
and Annual Percentage Change in Surrender Value for a $10,000 Single Purchase
Payment Contract. The percentage change is calculated by dividing the
difference in unit or index values at the beginning and end of the period by
the beginning unit or index value. See the Statement of Additional Information
for a description of the method for calculating the annual effective rate of
return in this illustration.
 
                                     A-50
<PAGE>
 
  In addition, the Company may illustrate how variable annuity income payments
under the Contract and commuted values of annuity income options change with
investment performance over periods of time; such illustrations may be
hypothetical (based on assumed uniform annual rates of return) or historical
(based on historical annual returns of the sub-accounts). See "Hypothetical
Illustrations of Annuity Income Payouts" and "Historical Illustrations of
Annuity Income Payouts" in the Statement of Additional Information for a
description of these illustrations.
 
  From time to time the Company may advertise (in sales literature or
advertising material) performance rankings of the sub-accounts of the Variable
Account assigned by independent services, such as Variable Annuity Research
and Data Services ("VARDS"). VARDS monitors and ranks the performance of
variable annuity accounts on an industry-wide basis in each of the major
categories of investment objectives. The performance analysis prepared by
VARDS ranks accounts on the basis of total return calculated using
Accumulation Unit Values. Thus, the effect of the Contingent Deferred Sales
Charge and Administration Contract Charge assessed under the Contracts is not
taken into consideration.
 
  From time to time, articles discussing the Variable Account's investment
experience, performance rankings and other characteristics may appear in
national publications. Some or all of these publishers or ranking services
(including, but not limited to, Lipper Analytical Services, Inc. and
Morningstar) may publish their own rankings or performance reviews of variable
contract separate accounts, including the Variable Account. References to,
reprints or portions of reprints of such articles or rankings may be used by
the Company as sales literature or advertising material and may include
rankings that indicate the names of other variable contract separate accounts
and their investment experience.
 
  The Company is a member of the Insurance Marketplace Standards Association
("IMSA"), and as such may include the IMSA logo and information about IMSA
membership in its advertisements. Companies that belong to IMSA subscribe to a
set of ethical standards covering the various aspects of sales and service for
individually sold life insurance and annuities.
 
                                     A-51
<PAGE>
 
                                  APPENDIX A
 
                                 CONSUMER TIPS
 
DOLLAR COST AVERAGING
 
  Dollar cost averaging allows a person to take advantage of the historical
long-term stock market results, assuming that they continue, although it does
not guarantee a profit or protect against a loss. If an investor follows a
program of dollar cost averaging on a long-term basis and the stock fund
selected performs at least as well as the S&P 500 has historically, it is
likely although not guaranteed that the price at which shares are surrendered,
for whatever reason, will be higher than the average cost per share.
 
  An investor using dollar cost averaging invests the same amount of money in
the same professionally managed fund at regular intervals over a long period
of time. Dollar cost averaging keeps an investor from investing too much when
the price of shares is high and too little when the price is low. When the
price of shares is low, the money invested buys more shares. When it is high,
the money invested buys fewer shares. If the investor has the ability and
desire to maintain this program over a long period of time (for example, 20
years), and the stock fund chosen follows the historical upward market trends,
the price at which the shares are sold should be higher than their average
cost. The price could be lower, however, if the fund chosen does not follow
these historical trends.
 
  Investors contemplating the use of dollar cost averaging should consider
their ability to continue the on-going purchases so that they can take
advantage of periods of low price levels.
 
DIVERSIFICATION
 
  Diversifying investment choices can enhance returns, by providing a wider
opportunity for safe returns, and reduce risks, by spreading the chance of
loss. Holding a single investment requires of that investment a safe return
because a loss may risk the entire investment. By diversifying, on the other
hand, an investor can more safely take a chance that some investments will
under-perform and that others will over-perform. Thus an investor can
potentially earn a better-than-average rate of return on a diversified
portfolio than on a single safe investment. This is because, although portions
of a diversified investment may be totally lost, other portions may perform at
above- average rates that more than compensate for the loss.
 
MISCELLANEOUS
 
  Toll-free telephone service:
                        --A recording of daily unit values is available by
                          calling 1-800-333-2501.
                        --Fund transfers and changes of future purchase
                          payment allocations can be made by calling 
                          1-800-435-4117.
 
  Written Communications:
                        --All communications and inquiries regarding address
                          changes, premium payments, billing, fund transfers,
                          surrenders, maturities and any other processing
                          matters relating to your Contract should be directed
                          to:
 
                           New England Annuities
                           P.O. Box 642
                           Boston, Mass 02116
 
                                     A-52
<PAGE>
 
                                  APPENDIX B
 
                       CONTINGENT DEFERRED SALES CHARGE
 
  The following example illustrates how the Contingent Deferred Sales Charge
would apply if the commuted value of amounts that have been placed under
certain payment options is later withdrawn. As described in the prospectus in
the section "Contingent Deferred Sales Charge," no Contingent Deferred Sales
Charge will apply if at any time more than 30 days from issue of the Contract
you apply the proceeds to a variable or fixed payment option involving a life
contingency or, for a minimum specified period of 15 years, to either the
Variable Income for a Specified Number of Years Option or the Variable Income
Payments to Age 100 Option, or a comparable fixed option. However, if you
subsequently withdraw the commuted value of amounts placed under any of those
options, the Company will deduct from the amount you receive a portion of the
Contingent Deferred Sales Charge that was waived, based on the ratio of: (1)
the number of whole months remaining on the date of withdrawal until the date
when the Contingent Deferred Sales Charge would expire, to (2) the number of
whole months that were remaining when the proceeds were applied to the option,
until the date when the Contingent Deferred Sales Charge would expire.
 
  As an example, assume that $100,000 of Contract Value (net of any premium
tax charge and Administration Contract Charge) is applied to the Variable
Income for a Specified Number of Years Option for a 20 year period. Assume
further that the proceeds are derived from a $30,000 purchase payment made ten
years ago, a $30,000 purchase payment made exactly two years ago, and
investment earnings, and that the Contingent Deferred Sales Charge waived on
application of the proceeds to the payment option was $1,500. If the Payee
surrenders the commuted value of the proceeds under option six months later,
the Contingent Deferred Sales Charge would be $1,350 (representing the $1,500
waived at annuitization multiplied by 54/60, where 54 is the number of whole
months currently remaining until the Contingent Deferred Sales Charge would
expire, and 60 is the number of whole months that remained at the time of
annuitization until the Contingent Deferred Sales Charge would expire).
 
                                     A-53
<PAGE>
 
                                   APPENDIX C
 
                                  PREMIUM TAX
 
  Premium tax rates are subject to change. At present the Company pays premium
taxes in the following jurisdictions at the rates shown.
 
<TABLE>
<CAPTION>
                      CONTRACTS USED WITH TAX
JURISDICTION          QUALIFIED RETIREMENT PLANS ALL OTHER CONTRACTS
- ------------          -------------------------- -------------------
<S>                   <C>                        <C>
California                       0.50%                  2.35%
District of Columbia             2.25%                  2.25%
Kentucky                         2.00%                  2.00%
Maine                              --                   2.00%
Nevada                             --                   3.50%
Puerto Rico                      1.00%                  1.00%
South Dakota                       --                   1.25%
West Virginia                    1.00%                  1.00%
Wyoming                            --                   1.00%
</TABLE>
 
See "Premium Tax Charges" in the prospectus for more information about how
premium taxes affect the Contracts.
 
                                      A-54
<PAGE>
 
                               TABLE OF CONTENTS
                                       OF
                      STATEMENT OF ADDITIONAL INFORMATION
 
<TABLE>   
<CAPTION>
                                                                           PAGE
                                                                           -----
<S>                                                                        <C>
THE COMPANY...............................................................  II-3
SERVICES RELATING TO THE VARIABLE ACCOUNT.................................  II-3
PERFORMANCE COMPARISONS...................................................  II-3
CALCULATION OF PERFORMANCE DATA...........................................  II-4
NET INVESTMENT FACTOR..................................................... II-16
ANNUITY PAYMENTS.......................................................... II-16
HYPOTHETICAL ILLUSTRATIONS OF ANNUITY INCOME PAYOUTS...................... II-17
HISTORICAL ILLUSTRATIONS OF ANNUITY INCOME PAYOUTS........................ II-22
EXPERTS................................................................... II-25
LEGAL MATTERS............................................................. II-25
APPENDIX A................................................................ II-26
FINANCIAL STATEMENTS......................................................   F-1
</TABLE>    
   
  If you would like to obtain a copy of the Preliminary Statement of Additional
Information, please complete the request form below and mail to:     
 
  New England Securities Corporation
  399 Boylston Street
  Boston, Massachusetts 02116
              
             Please send a copy of the Preliminary Statement of
           Additional Information for New England Variable Annuity
           Separate Account (American Growth Series) to:     
 
           --------------------------------------------------------
           Name
 
           --------------------------------------------------------
           Street
 
           --------------------------------------------------------
           City                      State                       Zip
 
                                      A-55
<PAGE>
 
                      NEW ENGLAND LIFE INSURANCE COMPANY
                              501 BOYLSTON STREET
                               BOSTON, MA 02116
 
                                    RECEIPT
   
  This is to acknowledge receipt of an American Growth Series Preliminary
Prospectus dated June 30, 1998. This Variable Annuity Contract is offered by
New England Life Insurance Company.     
 
_____________________________________     _____________________________________
               (Date)                             (Client's Signature)
<PAGE>
 
                 NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT
                            AMERICAN GROWTH SERIES
                     INDIVIDUAL VARIABLE ANNUITY CONTRACTS
                 ISSUED BY NEW ENGLAND LIFE INSURANCE COMPANY
                                  
                               PRELIMINARY     
                      STATEMENT OF ADDITIONAL INFORMATION
                                   (PART B)
                                 
                              JUNE 30, 1998     
                             
                          SUBJECT TO COMPLETION     
   
  This Statement of Additional Information is not a prospectus. This Statement
of Additional Information relates to the Preliminary Prospectus dated June 30,
1998 and should be read in conjunction therewith. A copy of the Prospectus may
be obtained by writing to New England Securities Corporation ("New England
Securities") 399 Boylston Street, Boston, Massachusetts 02116.     
   
VA-155SAI-98     
 
                                     II-1
<PAGE>
 
                               TABLE OF CONTENTS
 
<TABLE>   
<CAPTION>
                                                                           PAGE
                                                                           -----
<S>                                                                        <C>
The Company...............................................................  II-3
Services Relating to the Variable Account.................................  II-3
Performance Comparisons...................................................  II-3
Calculation of Performance Data...........................................  II-4
Net Investment Factor..................................................... II-16
Annuity Payments.......................................................... II-16
Hypothetical Illustrations of Annuity Income Payouts...................... II-17
Historical Illustrations of Annuity Income Payouts........................ II-22
Experts................................................................... II-25
Legal Matters............................................................. II-25
Appendix A................................................................ II-26
Financial Statements......................................................   F-1
</TABLE>    
   
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these
securities in any state in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any such state.     
 
                                     II-2
<PAGE>
 
                                  THE COMPANY
 
  New England Life Insurance Company ("The Company") is an indirect, wholly-
owned subsidiary of Metropolitan Life Insurance Company ("MetLife").
 
                   SERVICES RELATING TO THE VARIABLE ACCOUNT
 
  The Company maintains the books and records of the Variable Account and
provides issuance and other administrative services for the Contracts.
 
  Auditors. Deloitte & Touche LLP, located at 125 Summer Street, Boston,
Massachusetts 02110, conducts an annual audit of the Variable Account's
financial statements.
 
  Principal Underwriter. New England Securities Corporation ("New England
Securities"), an indirect subsidiary of the Company, serves as principal
underwriter for the Variable Account pursuant to a distribution agreement with
the Company. The Contracts are offered continuously and may be sold by
registered representatives of broker-dealers that have selling agreements with
New England Securities as well as by the Company's life insurance agents and
insurance brokers who are registered representatives of New England
Securities. The Company pays commissions, none of which are retained by New
England Securities, in connection with sales of the Contracts. For the years
ended December 31, 1995, 1996 and 1997, the Company paid commissions in the
amount of $1,223,006.20, $3,782,305.00 and $5,081,873.33 respectively.
 
                            PERFORMANCE COMPARISONS
 
  Articles and releases, developed by the Company, the Eligible Funds (as
defined in the Prospectus) and other parties, about the Account or the
Eligible Funds regarding performance, rankings, statistics and analyses of the
Account's, the individual Eligible Funds' and fund groups' asset levels and
sales volumes, statistics and analyses of industry sales volumes and asset
levels, and other characteristics may appear in publications, including, but
not limited to, those publications listed in Appendix A to this Statement of
Additional Information. In particular, some or all of these publications may
publish their own rankings or performance reviews including the Account or the
Eligible Funds. References to or reprints of such articles may be used in
promotional literature. Such literature may refer to personnel of the advisers
and/or subadvisers who have portfolio management responsibility, and their
investment style. The references may allude to or include excerpts from
articles appearing in the media.
 
  The advertising and sales literature for the Contracts and the Account may
refer to historical, current and prospective economic trends and may include
historical and current performance and total returns of investment
alternatives.
 
  In addition, sales literature may be published concerning topics of general
investor interest for the benefit of registered representatives and
prospective Contractholders. These materials may include, but are not limited
to, discussions of college planning, retirement planning, reasons for
investing and historical examples of the investment performance of various
classes of securities, securities markets and indices.
 
                                     II-3
<PAGE>
 
                        CALCULATION OF PERFORMANCE DATA
 
  The tables below illustrate hypothetical average annual total returns for
each sub-account for the periods shown, based on the actual investment
experience of the sub-accounts, and the New England Zenith Fund (the "Zenith
Fund") during those periods. The tables do not represent what may happen in
the future.
   
  The Variable Account was not established until July, 1994. The Contracts
were not available before August, 1998. The Back Bay Advisors Bond Income and
Back Bay Advisors Money Market Series commenced operations on August 26, 1983.
The Westpeak Growth and Income and Goldman Sachs Midcap Value Series (formerly
the Loomis Sayles Avanti Growth Series) commenced operations on April 30,
1993. The Small Cap Series commenced operations on May 2, 1994. The six other
Eligible Funds did not commence operations until October 31, 1994.     
 
  Calculations of average annual total return are based on the assumption that
a single investment of $1,000 was made at the beginning of each period shown.
The figures do not reflect the effect of any premium tax charge, which applies
in certain states, and which would reduce the results shown.
 
  The average annual total return is related to surrender value and is
calculated as follows. The amount of the assumed $1,000 purchase payment for a
Contract issued at the beginning of the period is divided by the Accumulation
Unit Value of each sub-account at the beginning of the period shown to arrive
at the number of Accumulation Units purchased. The number of Accumulation
Units is reduced on each Contract anniversary to reflect deduction of the
annual $30 Administration Contract Charge from the Contract Value. For
purposes of this calculation, the maximum Administration Contract Charge of
$30 is deducted, although the actual charge will be the lesser of 2% of
Contract Value and $30 (and may be waived for certain large Contracts). Each
such $30 deduction reduces the number of units held under the Contract by an
amount equal to $30 divided by the Accumulation Unit Value on the date of the
deduction. The total number of units held under the Contract at the beginning
of the last Contract Year covered by the period shown is multiplied by the
Accumulation Unit Value on December 31, 1997 to arrive at the Contract Value
on that date. This Contract Value is then reduced by the applicable Contingent
Deferred Sales Charge and the portion of the $30 Administration Contract
Charge which would be deducted upon surrender on December 31, 1997 to arrive
at the surrender value. The average annual total return is the annual
compounded rate of return which would produce the surrender value on December
31, 1997. In other words, the average annual total return is the rate which,
when added to 1, raised to a power reflecting the number of years in the
period shown, and multiplied by the initial $1,000 investment, yields the
surrender value at the end of the period. The average annual total returns
assume that no premium tax charge has been deducted.
 
  Sub-Account average annual total return, which is calculated in accordance
with the SEC standardized formula, uses the inception date of the sub-account
through which the Eligible Fund shown is available. Fund total return adjusted
for Contract charges uses the inception date of the Eligible Fund shown, and
therefore may reflect periods prior to the availability of the corresponding
sub-account under the Contract. THIS INFORMATION DOES NOT INDICATE OR
REPRESENT FUTURE PERFORMANCE.
       
                                     II-4
<PAGE>
 
                FUND TOTAL RETURN ADJUSTED FOR CONTRACT CHARGES
 
  For purchase payment allocated to the Loomis Sayles Small Cap Series
 
<TABLE>   
<CAPTION>
                           PERIOD ENDING DECEMBER 31, 1997
                           -------------------------------
      <S>                                                                 <C>
      1 Year............................................................. 14.12%
      Since Inception of the Fund........................................ 16.29%
</TABLE>    
 
  For purchase payment allocated to the Morgan Stanley International Magnum
Equity Series*
 
<TABLE>   
<CAPTION>
                          PERIOD ENDING DECEMBER 31, 1997
                          -------------------------------
      <S>                                                              <C>
      1 Year.......................................................... -10.76%
      Since Inception of the Fund.....................................  -1.12%
 
  For purchase payment allocated to the Alger Equity Growth Series
 
<CAPTION>
                          PERIOD ENDING DECEMBER 31, 1997
                          -------------------------------
      <S>                                                              <C>
      1 Year..........................................................  14.88%
      Since Inception of the Fund.....................................  20.04%
</TABLE>    
 
  For purchase payment allocated to the Goldman Sachs Midcap Value Series**
 
<TABLE>   
<CAPTION>
                           PERIOD ENDING DECEMBER 31, 1997
                           -------------------------------
      <S>                                                                 <C>
      1 Year.............................................................  6.69%
      Since Inception of the Fund........................................ 12.10%
 
  For purchase payment allocated to the Davis Venture Value Series
 
<CAPTION>
                           PERIOD ENDING DECEMBER 31, 1997
                           -------------------------------
      <S>                                                                 <C>
      1 Year............................................................. 22.64%
      Since Inception of the Fund........................................ 24.28%
 
  For purchase payment allocated to the Westpeak Growth and Income Series
 
<CAPTION>
                           PERIOD ENDING DECEMBER 31, 1997
                           -------------------------------
      <S>                                                                 <C>
      1 Year............................................................. 22.62%
      Since Inception of the Fund........................................ 16.30%
 
  For purchase payment allocated to the Loomis Sayles Balanced Series
 
<CAPTION>
                           PERIOD ENDING DECEMBER 31, 1997
                           -------------------------------
      <S>                                                                 <C>
      1 Year.............................................................  5.57%
      Since Inception of the Fund........................................ 12.86%
 
  For purchase payment allocated to the Salomon Brothers Strategic Bond
Opportunities Series
 
<CAPTION>
                           PERIOD ENDING DECEMBER 31, 1997
                           -------------------------------
      <S>                                                                 <C>
      1 Year.............................................................   .78%
      Since Inception of the Fund........................................  8.19%
</TABLE>    
- --------
*  The Morgan Stanley International Magnum Equity Series' subadviser was
   Draycott Partners, Ltd. until May 1, 1997, when Morgan Stanley Asset
   Management Inc. became the subadviser.
** The Goldman Sachs Midcap Value Series' subadviser was Loomis, Sayles &
   Company, L.P. until May 1, 1998, when Goldman Sachs Asset Management became
   the subadviser.
 
                                      II-5
<PAGE>
 
  For purchase payment allocated to the Back Bay Advisors Bond Income Series
 
<TABLE>   
<CAPTION>
                           PERIOD ENDING DECEMBER 31, 1997
                           -------------------------------
      <S>                                                                 <C>
      1 Year.............................................................   .61%
      5 Years............................................................  4.24%
      10 years...........................................................  6.03%
      Since Inception of the Fund........................................  6.97%
 
  For purchase payment allocated to the Salomon Brothers U.S. Government
Series
 
<CAPTION>
                           PERIOD ENDING DECEMBER 31, 1997
                           -------------------------------
      <S>                                                                 <C>
      1 Year............................................................. -1.65%
      Since Inception of the Fund........................................  3.04%
 
  For purchase payment allocated to the Back Bay Advisors Money Market Series
 
<CAPTION>
                           PERIOD ENDING DECEMBER 31, 1997
                           -------------------------------
      <S>                                                                 <C>
      1 Year............................................................. -4.57%
      5 Years............................................................  -.23%
      10 years...........................................................  1.61%
      Since Inception of the Fund........................................  2.62%
</TABLE>    
 
  Information is available illustrating the impact of fund performance on
annuity payouts. For examples, see "Hypothetical Illustrations of Annuity
Income Payments" and "Historical Illustrations of Annuity Income Payments" in
this Statement of Additional Information.
 
  The following chart illustrates how the average annual total return was
determined for the five year period ending December 31, 1997 for the sub-
account investing in the Back Bay Advisors Bond Income Series based on the
assumptions used in the above table. The units column below shows the number
of accumulation units hypothetically purchased by the $1000 investment in the
Series in the first year. The units are reduced on each Contract anniversary
to reflect the deduction of the $30 Administration Contract Charge. The
illustration assumes no premium tax charge is deducted.
 
  The unit values of the sub-accounts reflect the change in the net asset
value of the underlying Eligible Funds plus the reinvestment of dividends from
net investment income and of distributions from net realized gains, if any.
The unit values also reflect the deduction of the Mortality and Expense Risk
Charge as well as the Administration Asset Charge.
 
<TABLE>   
<CAPTION>
                                                                      AVERAGE
                                          UNIT   CONTRACT SURRENDER ANNUAL TOTAL
   DATE                         UNITS    VALUE    VALUE     VALUE      RETURN
   ----                        -------- -------- -------- --------- ------------
   <S>                         <C>      <C>      <C>      <C>       <C>
   December 31, 1992.......... 419.0290 2.386470 1,000.00       --       --
   December 31, 1993.......... 407.7086 2.650071 1,080.46 $1,022.11     2.21%
   December 31, 1994.......... 395.8294 2.525427   999.64    954.65    -2.29%
   December 31, 1995.......... 385.8902 3.018347 1,164.75  1,124.75     4.00%
   December 31, 1996.......... 376.2539 3.113250 1,171.37  1,141.37     3.36%
   December 31, 1997.......... 367.4415 3.404265 1,250.87  1,230.87     4.24%
</TABLE>    
 
                                     II-6
<PAGE>
 
  The following charts illustrate what would have been the growth and value of
a $10,000 purchase payment if it had been invested in each of the Eligible
Funds on the first day of the first month after those Eligible Funds became
available: September 1, 1983 for the Back Bay Advisors Money Market and Back
Bay Advisors Bond Income Series; May 1, 1993 for the Westpeak Growth and
Income and Goldman Sachs Midcap Value Series; May 2, 1994 for the Loomis
Sayles Small Cap Series; and November 1, 1994 for the other series of the
Zenith Fund. The figures shown do not reflect the deduction of any premium tax
charge on surrender. During the period when the Contingent Deferred Sales
Charge applies, the percentage return on surrender value from year to year
(after the 1st year) will be greater than the percentage return on Contract
Value for the same years. This is because the percentage return on surrender
value reflects not only investment experience but also the annual reduction in
the applicable Contingent Deferred Sales Charge. In the first chart, the
Contract Value and surrender value on each date shown are calculated in the
manner described in the preceding illustrations of average annual total
return, assuming that no premium tax charge is deducted on surrender.
 
  In the second and third charts, the difference between the Contract Value or
surrender value at the beginning and at the end of each year is divided by the
beginning Contract Value or surrender value to arrive at the annual percentage
change. The cumulative return information set forth in these charts is
determined by taking the difference between the $10,000 investment and the
ending Contract Value or surrender value and dividing it by $10,000. The
annual effective rate of return in this illustration is calculated in the same
manner as the average annual total return described in the preceding
illustration, assuming that no premium tax charge is deducted on surrender.
 
                   $10,000 SINGLE PURCHASE PAYMENT CONTRACT
BACK BAY ADVISORS BOND INCOME AND BACK BAY ADVISORS MONEY MARKET SERIES ISSUED
                               SEPTEMBER 1, 1983
WESTPEAK GROWTH AND INCOME AND GOLDMAN SACHS MIDCAP VALUE(3) SERIES ISSUED MAY
                                    1, 1993
               LOOMIS SAYLES SMALL CAP SERIES ISSUED MAY 2, 1994
               OTHER ZENITH FUND SERIES ISSUED NOVEMBER 1, 1994
                              INVESTMENT RESULTS
 
                               CONTRACT VALUE(1)
 
<TABLE>   
<CAPTION>
                                MORGAN                                                               SALOMON
                    LOOMIS      STANLEY                GOLDMAN               WESTPEAK               BROTHERS     BACK BAY
                    SAYLES   INTERNATIONAL   ALGER      SACHS      DAVIS      GROWTH     LOOMIS     STRATEGIC    ADVISORS
                    SMALL       MAGNUM       EQUITY     MIDCAP    VENTURE      AND       SAYLES       BOND         BOND
                     CAP       EQUITY(2)     GROWTH    VALUE(3)    VALUE      INCOME    BALANCED  OPPORTUNITIES   INCOME
                  ---------- ------------- ---------- ---------- ---------- ---------- ---------- ------------- ----------
<S>               <C>        <C>           <C>        <C>        <C>        <C>        <C>        <C>           <C>
As of December
 31:
 1983............                                                                                               $10,337.67
 1984............                                                                                                11,445.98
 1985............                                                                                                13,372.34
 1986............                                                                                                15,111.94
 1987............                                                                                                15,209.14
 1988............                                                                                                16,221.84
 1989............                                                                                                17,933.29
 1990............                                                                                                19,081.33
 1991............                                                                                                22,162.98
 1992............                                                                                                23,611.58
 1993............                                     $11,366.57            $11,317.31                           26,189.62
 1994............ $ 9,587.79  $10,237.00   $ 9,694.22  11,147.74 $ 9,628.18  10,995.38 $ 9,967.47  $ 9,838.07    24,928.24
 1995............  12,146.27   10,692.43    14,185.73  14,294.36  13,193.69  14,760.65  12,234.95   11,551.12    29,762.30
 1996............  15,616.68   11,215.69    15,798.75  16,543.95  16,338.34  17,154.34  14,072.65   12,993.93    30,666.44
 1997............  19,189.74   10,886.69    19,541.57  19,105.05  21,477.28  22,540.94  16,091.52   14,201.85    33,501.82
<CAPTION>
                   SALOMON    BACK BAY
                   BROTHERS   ADVISORS
                     U.S.      MONEY
                  GOVERNMENT   MARKET
                  ---------- ----------
<S>               <C>        <C>
As of December
 31:
 1983............            $10,256.90
 1984............             11,167.87
 1985............             11,891.93
 1986............             12,494.00
 1987............             13,093.94
 1988............             13,851.97
 1989............             14,893.43
 1990............             15,858.00
 1991............             16,578.78
 1992............             16,938.41
 1993............             17,169.20
 1994............ $10,037.26  17,573.10
 1995............  11,354.32  18,286.71
 1996............  11,536.13  18,925.00
 1997............  12,308.95  19,627.81
</TABLE>    
 
                                     II-7
<PAGE>
 
                               SURRENDER VALUE(1)
 
<TABLE>   
<CAPTION>
                                MORGAN                                                               SALOMON
                    LOOMIS      STANLEY                GOLDMAN               WESTPEAK               BROTHERS     BACK BAY
                    SAYLES   INTERNATIONAL   ALGER      SACHS      DAVIS      GROWTH     LOOMIS     STRATEGIC    ADVISORS
                    SMALL       MAGNUM       EQUITY     MIDCAP    VENTURE      AND       SAYLES       BOND         BOND
                     CAP       EQUITY(2)     GROWTH    VALUE(3)    VALUE      INCOME    BALANCED  OPPORTUNITIES   INCOME
                  ---------- ------------- ---------- ---------- ---------- ---------- ---------- ------------- ----------
<S>               <C>        <C>           <C>        <C>        <C>        <C>        <C>        <C>           <C>
As of December
 31:
 1983............                                                                                               $ 9,674.03
 1984............                                                                                                10,835.98
 1985............                                                                                                12,862.34
 1986............                                                                                                14,701.94
 1987............                                                                                                14,899.14
 1988............                                                                                                16,011.84
 1989............                                                                                                17,823.29
 1990............                                                                                                19,071.33
 1991............                                                                                                22,152.98
 1992............                                                                                                23,601.58
 1993............                                     $10,646.57            $10,597.31                           26,179.62
 1994............ $ 8,969.15  $ 9,585.41   $ 9,080.62  10,527.74 $ 9,019.21  10,380.95 $ 9,334.75  $ 9,214.41    24,918.24
 1995............  11,528.77   10,106.41    13,580.73  13,774.36  12,588.59  14,240.65  11,629.95   10,946.12    29,752.30
 1996............  15,099.18   10,710.69    15,293.75  16,123.95  15,833.34  16,734.34  13,567.65   12,488.93    30,656.44
 1997............  18,772.24   10,490.72    19,136.57  18,785.05  21,072.28  22,220.94  15,686.52   13,796.85    33,491.82
<CAPTION>
                   SALOMON    BACK BAY
                   BROTHERS   ADVISORS
                     U.S.      MONEY
                  GOVERNMENT   MARKET
                  ---------- ----------
<S>               <C>        <C>
As of December
 31:
 1983............            $ 9,598.92
 1984............             10,557.87
 1985............             11,381.93
 1986............             12,084.00
 1987............             12,783.94
 1988............             13,641.97
 1989............             14,783.43
 1990............             15,848.00
 1991............             16,568.78
 1992............             16,928.41
 1993............             17,159.20
 1994............ $ 9,399.65  17,563.10
 1995............  10,749.32  18,276.71
 1996............  11,031.13  18,915.00
 1997............  11,903.95  19,617.81
</TABLE>    
 
                 ANNUAL PERCENTAGE CHANGE IN CONTRACT VALUE(1)
 
<TABLE>   
<CAPTION>
                                     MORGAN                                                    SALOMON
                          LOOMIS     STANLEY            GOLDMAN           WESTPEAK            BROTHERS
                          SAYLES  INTERNATIONAL ALGER    SACHS    DAVIS    GROWTH   LOOMIS    STRATEGIC
                          SMALL      MAGNUM     EQUITY   MIDCAP  VENTURE    AND     SAYLES      BOND
                           CAP      EQUITY(2)   GROWTH  VALUE(3)  VALUE    INCOME  BALANCED OPPORTUNITIES
                          ------  ------------- ------  -------- -------  -------- -------- -------------
<S>                       <C>     <C>           <C>     <C>      <C>      <C>      <C>      <C>
As of December 31:
 1983...................
 1984...................
 1985...................
 1986...................
 1987...................
 1988...................
 1989...................
 1990...................
 1991...................
 1992...................
 1993...................                                 13.67%             13.17%
 1994...................  -4.12%       2.37%    -3.60%   -1.93    -3.72%    -2.84   -0.33%      -1.62%
 1995...................  26.68        4.45     46.33    28.23    37.03     34.24   22.75       17.41
 1996...................  28.57        4.89     11.37    15.74    23.84     16.22   15.02       12.49
 1997...................  22.88       -2.93     23.69    15.48    31.45     31.40   14.35        9.30
Cumulative Return.......  91.90        8.87     95.42    91.05   114.77    125.41   60.92       42.02
Annual Effective Rate of
 Return.................  19.46        2.72     23.58    14.87    27.32     19.02   16.22       11.72
</TABLE>    
 
<TABLE>   
<CAPTION>
                                                                               LEHMAN
                                                                            INTERMEDIATE
                          BACK BAY  SALOMON   BACK BAY                      GOVERNMENT/
                          ADVISORS  BROTHERS  ADVISORS DOW JONES  S&P 500    CORPORATE   CONSUMER
                            BOND      U.S.     MONEY   INDUSTRIAL  STOCK        BOND      PRICE
                           INCOME  GOVERNMENT  MARKET  AVERAGE(4) INDEX(5)    INDEX(6)   INDEX(7)
                          -------- ---------- -------- ---------- --------  ------------ --------
<S>                       <C>      <C>        <C>      <C>        <C>       <C>          <C>
As of December 31:
 1983...................     3.38%              2.57%       5.11%     1.79%      4.51%     1.07%
 1984...................    10.72               8.88        1.35      6.27      14.37      3.95
 1985...................    16.83               6.48       33.62     31.73      18.06      3.77
 1986...................    13.01               5.06       27.25     18.66      13.13      1.13
 1987...................     0.64               4.80        5.55      5.25       3.66      4.41
 1988...................     6.66               5.79       16.21     16.61       6.67      4.42
 1989...................    10.55               7.52       32.24     31.69      12.77      4.65
 1990...................     6.40               6.48       -0.54     -3.10       9.16      6.11
 1991...................    16.15               4.55       24.25     30.47      14.62      3.06
 1992...................     6.54               2.17        7.40      7.62       7.17      2.90
 1993...................    10.92               1.36       16.97     10.08       8.79      2.75
 1994...................    -4.82     0.37%     2.35        5.02      1.32      -1.93      2.67
 1995...................    19.39    13.12      4.06       36.94     37.58      15.33      2.54
 1996...................     3.04     1.60      3.49       28.91     22.96       4.05      3.32
 1997...................     9.25     6.70      3.71       24.91     33.36       7.87      1.83
Cumulative Return.......   235.02    23.09     96.28    1,166.71  1,026.38     283.07     65.47
Annual Effective Rate of
 Return.................     8.80     6.79      4.82       18.44     17.52       9.37      3.41
</TABLE>    
 
                                      II-8
<PAGE>
 
                ANNUAL PERCENTAGE CHANGE IN SURRENDER VALUE(1)
 
<TABLE>   
<CAPTION>
                                     MORGAN                                                    SALOMON
                          LOOMIS     STANLEY            GOLDMAN           WESTPEAK            BROTHERS
                          SAYLES  INTERNATIONAL ALGER    SACHS    DAVIS    GROWTH   LOOMIS    STRATEGIC
                          SMALL      MAGNUM     EQUITY   MIDCAP  VENTURE    AND     SAYLES      BOND
                           CAP      EQUITY(2)   GROWTH  VALUE(3)  VALUE    INCOME  BALANCED OPPORTUNITIES
                          ------  ------------- ------  -------- -------  -------- -------- -------------
<S>                       <C>     <C>           <C>     <C>      <C>      <C>      <C>      <C>
As of December 31:
 1983...................
 1984...................
 1985...................
 1986...................
 1987...................
 1988...................
 1989...................
 1990...................
 1991...................
 1992...................
 1993...................                                  6.47%              5.97%
 1994...................  -10.31%     -4.15%    -9.19%   -1.12    -9.81%    -2.04   -6.65%      -7.86%
 1995...................   28.54       5.44     49.56    30.84    39.58     37.18   24.59       18.79
 1996...................   30.97       5.98     12.61    17.06    25.78     17.51   16.66       14.09
 1997...................   24.33      -2.05     25.13    16.50    33.09     32.79   15.62       10.47
Cumulative Return.......   87.72       4.91     91.37    87.85   110.72    122.21   56.87       37.97
Annual Effective Rate of
 Return.................   18.74       1.53     22.76    14.46    26.56     18.65   15.29       10.71
</TABLE>    
 
<TABLE>   
<CAPTION>
                                                                               LEHMAN
                                                                            INTERMEDIATE
                          BACK BAY  SALOMON   BACK BAY                      GOVERNMENT/
                          ADVISORS  BROTHERS  ADVISORS DOW JONES  S&P 500    CORPORATE   CONSUMER
                            BOND      U.S.     MONEY   INDUSTRIAL  STOCK        BOND      PRICE
                           INCOME  GOVERNMENT  MARKET  AVERAGE(4) INDEX(5)    INDEX(6)   INDEX(7)
                          -------- ---------- -------- ---------- --------  ------------ --------
<S>                       <C>      <C>        <C>      <C>        <C>       <C>          <C>
As of December 31:
 1983...................    -3.26%             -4.01%       5.11%     1.79%      4.51%     1.07%
 1984...................    12.01               9.99        1.35      6.27      14.37      3.95
 1985...................    18.70               7.81       33.62     31.73      18.06      3.77
 1986...................    14.30               6.17       27.25     18.66      13.13      1.13
 1987...................     1.34               5.79        5.55      5.25       3.66      4.41
 1988...................     7.47               6.71       16.21     16.61       6.67      4.42
 1989...................    11.31               8.37       32.24     31.69      12.77      4.65
 1990...................     7.00               7.20       -0.54     -3.10       9.16      6.11
 1991...................    16.16               4.55       24.25     30.47      14.62      3.06
 1992...................     6.54               2.17        7.40      7.62       7.17      2.90
 1993...................    10.92               1.36       16.97     10.08       8.79      2.75
 1994...................    -4.82    -6.00%     2.35        5.02      1.32      -1.93      2.67
 1995...................    19.40    14.36      4.06       36.94     37.58      15.33      2.54
 1996...................     3.04     2.62      3.49       28.91     22.96       4.05      3.32
 1997...................     9.25     7.91      3.72       24.91     33.36       7.87      1.83
Cumulative Return.......   234.92    19.04     96.18    1,166.71  1,026.38     283.07     65.47
Annual Effective Rate of
 Return.................     8.80     5.66      4.81       18.44     17.52       9.37      3.41
</TABLE>    
- --------
NOTES:
(1) The Contract Values, surrender values, and annual percentage change
    figures assume reinvestment of dividends and capital gain distributions.
    The Contract Values are net of all deductions and expenses other than any
    applicable Contingent Deferred Sales Charge or premium tax charge. Each
    surrender value equals the Contract Value less any applicable Contingent
    Deferred Sales Charge and a pro rata portion of the annual $30
    Administration Contract Charge, but does not reflect a deduction for the
    premium tax charge. (See "Administration Charges, Contingent Deferred
    Sales Charge and Other Deductions.") 1983 figures for the Back Bay
    Advisors Bond Income and Back Bay Advisors Money Market Series are from
    September 1 through December 31, 1983. 1993 figures for the Westpeak
    Growth and Income and Goldman Sachs Midcap Value Series are from May 1
    through December 31, 1993. 1994 figures for the Loomis Sayles Small Cap
    Series are from May 2 through December 31, 1994. 1994 figures for all
    other series of the Zenith Fund are from November 1 through December 31,
    1994.
(2) The Morgan Stanley International Magnum Equity Series' subadviser was
    Draycott Partners, Ltd. until May 1, 1997, when Morgan Stanley Asset
    Management Inc. became the subadviser.
(3) The Goldman Sachs Midcap Value Series' subadviser was Loomis, Sayles &
    Company, L.P. until May 1, 1998, when Goldman Sachs Asset Management
    became the subadviser.
(4) The Dow Jones Industrial Average is a market value-weighted and unmanaged
    index of 30 large industrial stocks traded on the New York Stock Exchange.
    The annual percentage change figures have been adjusted to reflect
    reinvestment of dividends. 1983 figures are from September 1 through
    December 31, 1983.
(5) The S&P 500 Stock Index is an unmanaged weighted index of the stock
    performance of 500 industrial, transportation, utility and financial
    companies. The annual percentage change figures have been adjusted to
    reflect reinvestment of dividends. 1983 figures are from September 1
    through December 31, 1983.
(6) The Lehman Intermediate Government/Corporate Bond Index is a subset of the
    Lehman Government/Corporate Bond Index covering all issues with maturities
    between 1 and 10 years which is composed of taxable, publicly-issued, non-
    convertible debt obligations issued or guaranteed by the U.S. Government
    or its agencies and another Lehman index that is composed of taxable,
    fixed rate publicly-issued, investment grade non-convertible corporate
    debt obligations. 1983 figures are from September 1 through December 31,
    1983.
(7) The Consumer Price Index, published by the U.S. Bureau of Labor
    Statistics, is a statistical measure of changes, over time, in the prices
    of goods and services. 1983 figures are from September 1 through December
    31, 1983.
 
                                     II-9
<PAGE>
 
  The chart below illustrates what would have been the change in value of a $250
monthly investment under a Contract in each of the Eligible Funds if purchase
payments had been made on the first day of each month starting with September 1,
1983 for the Back Bay Advisors Bond Income and Back Bay Advisors Money Market
Series, May 1, 1993 for the Westpeak Growth and Income and Goldman Sachs Midcap
Value Series, May 2, 1994 for the Loomis Sayles Small Cap Series and November 1,
1994 for the other series of the Zenith Fund. The figures shown do not reflect
the deduction of any premium tax charge on surrender, and only surrender values,
not Contract Values, reflect the deduction of any applicable Contingent Deferred
Sales Charge. Each purchase payment is divided by the Accumulation Unit Value of
each sub-account on the date of the investment to calculate the number of
Accumulation Units purchased. The total number of units under the Contract is
reduced on each Contract anniversary to reflect the $30 Administration Contract
Charge, in the same manner as described in the illustrations of average annual
total return. The Contract Value and the surrender value are calculated
according to the methods described in the preceding examples. The annual
effective rate of return in this illustration represents the compounded annual
rate that the hypothetical purchase payments shown would have had to earn in
order to produce the Contract Value and surrender value illustrated on December
31, 1997. The annual effective rate of return is the rate which, when added to 1
and raised to a power equal to the number of months for which the payment is
invested divided by twelve, and multiplied by the payment amount, for all
monthly payments, would yield the Contract Value or surrender value on the
ending date of the illustration.
 
                              INVESTMENT RESULTS
 
                     SEPTEMBER 1, 1983--DECEMBER 31, 1997
 
                    FOR BOND INCOME AND MONEY MARKET SERIES
 
 MAY 1, 1993--DECEMBER 31, 1997 FOR GROWTH AND INCOME AND AVANTI GROWTH SERIES
 
              MAY 2, 1994--DECEMBER 31, 1997 FOR SMALL CAP SERIES
 
       NOVEMBER 1, 1994--DECEMBER 31, 1997 FOR OTHER ZENITH FUND SERIES
 
<TABLE> 
<CAPTION>                                                               Contract Value
                               ---------------------------------------------------------------------------------------------------
                                              MORGAN                                                                             
                                 LOOMIS       STANLEY                 GOLDMAN      DAVIS      WESTPEAK                  SALOMON   
                                 SAYLES    INTERNATIONAL   ALGER       SACHS      VENTURE      GROWTH      LOOMIS      BROTHERS   
                   CUMULATIVE    SMALL        MAGNUM       EQUITY      MIDCAP      VALUE        AND        SAYLES        BOND     
                   PAYMENTS(1)    CAP        EQUITY(2)     GROWTH     VALUE(3)     GROWTH      INCOME     BALANCED   OPPORTUNITIES
                   ----------- ----------- ------------- ----------- ----------- ----------- ----------- ----------- -------------
 <S>               <C>         <C>         <C>           <C>         <C>         <C>         <C>         <C>         <C>          
 As of December 31:                                                                                                               
 1983............   $  1,000                                                                                                      
 1984............      4,000                                                                                                      
 1985............      7,000                                                                                                      
 1986............     10,000
 1987............     13,000
 1988............     16,000
 1989............     19,000
 1990............     22,000
 1991............     25,000
 1992............     28,000                                                                                                  
 1993............     31,000                                         $ 2,121.84              $ 2,120.54                         
 1994............     34,000   $  1,956.26  $    511.38  $   497.68    5,097.79  $   494.91    5,049.40  $    502.20 $    492.19
 1995............     37,000      5,895.10     3,637.36    4,222.10    9,873.90    4,125.99   10,258.06     3,904.75    3,814.17
 1996............     40,000     11,021.85     6,859.16    7,864.68   14,629.01    8,536.02   15,236.80     7,778.69    7,478.86
 1997............     43,000     16,902.67     9,550.07   13,001.28   20,125.90   14,632.30   23,467.27    12,114.50   11,316.03
Annual Effective                                                                                                   
 Rate of Return..                    24.03%        0.32%      20.25%      15.59%      28.38%      22.39%       15.52%      11.05%

<CAPTION>
                                                                        Contract Value
                               ---------------------------------------------------------------------------------------------------
                                 BACK BAY     SALOMON       SALOMON
                                 ADVISORS     BROTHERS     ADVISORS
                   CUMULATIVE      BOND         U.S.         MONEY   
                   PAYMENTS(1)    INCOME     GOVERNMENT     MARKET  
                   ----------- ----------- ------------- -----------
 <S>               <C>         <C>         <C>           <C>
 As of December 31:                                                                                                               
 1983............    $ 1,000   $  1,012.71               $  1,016.00
 1984............      4,000      4,347.60                  4,228.77
 1985............      7,000      8,359.85                  7,589.75
 1986............     10,000     12,610.03                 11,042.60
 1987............     13,000     15,713.15                 14,655.09
 1988............     16,000     19,831.44                 18,608.55
 1989............     19,000     25,092.76                 23,140.46
 1990............     22,000     29,874.35                 27,762.78
 1991............     25,000     38,038.94                 32,117.90
 1992............     28,000     43,679.58                 35,876.57
 1993............     31,000     51,587.72                 39,423.75
 1994............     34,000     52,090.01  $    502.40    43,437.95
 1995............     37,000     65,505.31     3,734.85    48,314.12
 1996............     40,000     70,653.96     6,849.78    53,109.32
 1997............     43,000     80,401.77    10,426.55    58,199.85
Annual Effective
 Rate of Return..                     8.27%        5.81%        4.09%
</TABLE>    

- -----------
(1) For the Westpeak Growth and Income and Goldman Sachs Midcap Value Series,
    cumulative payments as of December 31, 1993 would be $2,000, as of December
    31, 1994 would be $5,000, as of December 31, 1995 would be $8,000, as of
    December 31, 1996 would be $11,000 and as of December 31, 1997 would be
    $14,000. For the Loomis Sayles Small Cap Series, cumulative payments as of
    December 31, 1994 would be $2,000, as of December 31, 1995 would be $5,000,
    as of December 31, 1996 would be $8,000 and as of December 31, 1997 would be
    $11,000. For the other Zenith Fund Series, cumulative payments as of
    December 31, 1994 would be $500, as of December 31, 1995 would be $3,500, as
    of December 31, 1996 would be $6,500 and as of December 31, 1997 would be
    $9,500.
 
(2) The Morgan Stanley International Magnum Equity Series' subadviser was
    Draycott Partners, Ltd. until May 1, 1997, when Morgan Stanley Asset
    Management Inc. became the subadviser.
 
(3) The Goldman Sachs Midcap Value Series' subadviser was Loomis, Sayles &
    Company, L.P. until May 1, 1998 when Goldman Sachs Asset Management became
    the subadviser.
 
                                     II-10
<PAGE>
 
<TABLE>   
<CAPTION>
                                                                          SURRENDER VALUE                                         
                               ---------------------------------------------------------------------------------------------------
                                 LOOMIS       MORGAN                  GOLDMAN                                           SALOMON   
                                 SAYLES       STANLEY      ALGER       SACHS       DAVIS      WESTPEAK     LOOMIS      BROTHERS   
                   CUMULATIVE    SMALL     INTERNATIONAL   EQUITY      MIDCAP     VENTURE      GROWTH      SAYLES        BOND     
                   PAYMENTS(1)    CAP        MAGNUM(2)     GROWTH     VALUE(3)     VALUE     AND INCOME   BALANCED   OPPORTUNITIES
                   ----------- ----------- ------------- ----------- ----------- ----------- ----------- ----------- -------------
 <S>               <C>         <C>         <C>           <C>         <C>         <C>         <C>         <C>         <C>          
 As of December                                                                                                                   
  31:                                                                                                                             
 1983............    $ 1,000                                                                                                      
 1984............      4,000                                                                                                      
 1985............      7,000                                                                                                      
 1986............     10,000                                                                                                      
 1987............     13,000                                                                                                      
 1988............     16,000                                                                                                      
 1989............     19,000                                                                                                      
 1990............     22,000                                                                                                      
 1991............     25,000                                                                                                      
 1992............     28,000                                                                                                      
 1993............     31,000                                         $ 1,961.84              $ 1,960.54                           
 1994............     34,000   $ 1,803.57    $  472.33   $   459.59    4,763.39  $   457.01    4,718.60  $   463.80   $   454.48  
 1995............     37,000     5,547.60     3,405.07     3,977.10    9,363.90    3,880.99    9,748.06    3,659.75     3,571.44  
 1996............     40,000    10,514.35     6,459.43     7,444.68   13,989.01    8,116.02   14,596.80    7,358.69     7,058.86  
 1997............               16,265.17     9,048.11    12,436.28   19,385.90   14,067.30   22,727.27   11,549.50    10,751.03  
 Annual Effective                                                                                                                 
  Rate of Return.                   21.78%       -2.98%       17.26%      13.95%      25.64%      20.96%      12.38%        7.76% 

<CAPTION>
                                                                          SURRENDER VALUE                                         
                               ---------------------------------------------------------------------------------------------------
                                 BACK BAY      SALOMON     BACK BAY
                                 ADVISORS     BROTHERS     ADVISORS
                   CUMULATIVE      BOND         U.S.        MONEY  
                   PAYMENTS(1)    INCOME     GOVERNMENT     MARKET 
                   ----------- ----------- ------------- -----------
 <S>               <C>         <C>         <C>           <C>
 As of December                                                                                                                   
  31:                                                                                                                             
 1983............    $ 1,000  $   933.57                $   936.63 
 1984............      4,000    4,067.60                  3,956.32
 1985............      7,000    7,909.85                  7,145.30
 1986............     10,000   12,020.03                 10,452.60
 1987............     13,000   15,013.15                 13,955.09
 1988............     16,000   19,051.44                 17,828.55
 1989............     19,000   24,051.76                 22,310.46
 1990............     22,000   29,024.35                 26,912.78
 1991............     25,000   37,188.94                 31,267.90
 1992............     28,000   42,829.58                 35,026.57
 1993............     31,000   50,737.72                 38,573.75
 1994............     34,000   51,240.01    $  463.99    42,587.95
 1995............     37,000   64,655.31     3,497.31    47,464.12
 1996............     40,000   69,803.96     6,451.30    52,259.32
 1997............              79,551.77     9,867.25    57,349.85
 Annual Effective 
  Rate of Return.                   8.13%        2.35%        3.90%
</TABLE>      

- ------------
(1) For the Westpeak Growth and Income and Goldman Sachs Midcap Value Series,
    cumulative payments as of December 31, 1993 would be $2,000, as of December
    31, 1994 would be $5,000, as of December 31, 1995 would be $8,000, as of
    December 31, 1996 would be $11,000 and as of December 31, 1997 would be
    $14,000. For the Loomis Sayles Small Cap Series, cumulative payments as of
    December 31, 1994 would be $2,000, as of December 31, 1995 would be $5,000,
    as of December 31, 1996 would be $8,000 and, as of December 31, 1997 would
    be $11,000. For the other Zenith Fund Series, cumulative payments as of
    December 31, 1994 would be $500, as of December 31, 1995 would be $3,500, as
    of December 31, 1996 would be $6,500 and as of December 31, 1997 would be
    $9,500.
(2) The Morgan Stanley International Magnum Equity Series' subadviser was
    Draycott Partners, Ltd. until May 1, 1997, when Morgan Stanley Asset
    Management Inc. became the subadviser.
(3) The Goldman Sachs Midcap Value Series' subadviser was Loomis, Sayles &
    Company, L.P. until May 1, 1998, when Goldman Sachs Asset Management
    became the subadviser.
 
  As discussed in the prospectus in the section entitled "Investment
Experience Information", the Variable Account may illustrate historical
investment performance by showing the percentage change in unit value and the
annual effective rate of return of each sub-account of the Variable Account
for every calendar year since inception of the corresponding Eligible Funds to
the date of the illustration and for the ten, five and one year periods ending
with the date of the illustration. Examples of such illustrations follow. Such
illustrations do not reflect the impact of any Contingent Deferred Sales
Charge, premium tax charge, or the annual $30 Administration Contract Charge.
The method of calculating the percentage change in unit value is described in
the prospectus under "Investment Experience Information." The annual effective
rate of return in these illustrations is calculated by dividing the unit value
at the end of the period by the unit value at the beginning of the period,
raising this quantity to the power of 1/n (where n is the number of years in
the period), and then subtracting 1.
 
  Set forth on the following pages are illustrations of the percentage change
in unit value information and annual effective rate of return information
discussed above that may appear in the Variable Account's Annual and Semi-
Annual Reports and in other illustrations of historical investment
performance. Such illustrations do not reflect the impact of any Contingent
Deferred Sales Charge, premium tax charge, or the annual Administration
Contract Charge.
 
LOOMIS SAYLES SMALL CAP SUB-ACCOUNT
 
                     ANNUAL PERCENT CHANGE IN UNIT VALUE*
 
<TABLE>   
<CAPTION>
                                                             ACCUMULATION   %
       DATE                                                   UNIT VALUE  CHANGE
       ----                                                  ------------ ------
       <S>                                                   <C>          <C>
       May 1, 1994..........................................   1.000000
       December 31, 1994....................................    .958779    -4.1%
       December 31, 1995....................................   1.218215    27.1%
       December 31, 1996....................................   1.569712    28.9%
       December 31, 1997....................................   1.932590    23.1%
</TABLE>    
- -------
* Unit values do not reflect the impact of any Contingent Deferred Sales
  Charge, premium tax charge, or the annual Administration Contract Charge.
 
                                     II-11
<PAGE>
 
       PERCENT CHANGE IN UNIT VALUE AND ANNUAL EFFECTIVE RATE OF RETURN*
 
<TABLE>   
<CAPTION>
                                                              % CHANGE  ANNUAL
                                                              IN UNIT  EFFECTIVE
                                                               VALUE     RATE
                                                              -------- ---------
      <S>                                                     <C>      <C>
      3 years, 8 months ended December 31, 1997..............   93.3%    19.7%
      1 year ended December 31, 1997.........................   23.1%    23.1%
</TABLE>    
 
MORGAN STANLEY INTERNATIONAL MAGNUM EQUITY SUB-ACCOUNT**
 
                      ANNUAL PERCENT CHANGE IN UNIT VALUE*
 
<TABLE>   
<CAPTION>
                                                             ACCUMULATION   %
      DATE                                                    UNIT VALUE  CHANGE
      ----                                                   ------------ ------
      <S>                                                    <C>          <C>
      October 31, 1994......................................   1.000000
      December 31, 1994.....................................   1.023661     2.4%
      December 31, 1995.....................................   1.072382     4.8%
      December 31, 1996.....................................   1.127927     5.2%
      December 31, 1997.....................................   1.097793    -2.7%
</TABLE>    
 
       PERCENT CHANGE IN UNIT VALUE AND ANNUAL EFFECTIVE RATE OF RETURN*
 
<TABLE>   
<CAPTION>
                                                              % CHANGE  ANNUAL
                                                              IN UNIT  EFFECTIVE
                                                               VALUE     RATE
                                                              -------- ---------
      <S>                                                     <C>      <C>
      3 years, 2 months ended December 31, 1997..............    9.8%     3.0%
      1 year ended December 31, 1997.........................   -2.7%    -2.7%
</TABLE>    
 
EQUITY GROWTH SUB-ACCOUNT
 
                      ANNUAL PERCENT CHANGE IN UNIT VALUE*
 
<TABLE>   
<CAPTION>
                                                             ACCUMULATION   %
      DATE                                                    UNIT VALUE  CHANGE
      ----                                                   ------------ ------
      <S>                                                    <C>          <C>
      October 31, 1994......................................   1.000000
      December 31, 1994.....................................   0.955813    -4.4%
      December 31, 1995.....................................   1.401562    46.6%
      December 31, 1996.....................................   1.563978    11.6%
      December 31, 1997.....................................   1.937505    23.9%
</TABLE>    
 
       PERCENT CHANGE IN UNIT VALUE AND ANNUAL EFFECTIVE RATE OF RETURN*
 
<TABLE>   
<CAPTION>
                                                              % CHANGE  ANNUAL
                                                              IN UNIT  EFFECTIVE
                                                               VALUE     RATE
                                                              -------- ---------
      <S>                                                     <C>      <C>
      3 years, 2 months ended December 31, 1997..............   93.8%    23.2%
      1 year ended December 31, 1997.........................   23.9%    23.9%
</TABLE>    
 
GOLDMAN SACHS MIDCAP VALUE SUB-ACCOUNT***
 
                      ANNUAL PERCENT CHANGE IN UNIT VALUE*
 
<TABLE>   
<CAPTION>
                                                             ACCUMULATION   %
      DATE                                                    UNIT VALUE  CHANGE
      ----                                                   ------------ ------
      <S>                                                    <C>          <C>
      April 30, 1993........................................   1.000000
      December 31, 1993.....................................   1.136657    13.7%
      December 31, 1994.....................................   1.117861    -1.7%
      December 31, 1995.....................................   1.436949    28.5%
      December 31, 1996.....................................   1.666295    16.0%
      December 31, 1997.....................................   1.927771    15.7%
</TABLE>    
- --------
  * Unit values do not reflect the impact of any Contingent Deferred Sales
    Charge, premium tax charge, or the annual Administration Contract Charge.
 ** The Morgan Stanley International Magnum Equity Series' subadviser was
    Draycott Partners, Ltd. until May 1, 1997, when Morgan Stanley Asset
    Management Inc. became the subadviser.
*** The Goldman Sachs Midcap Value Series' subadviser was Loomis, Sayles &
    Company, L.P. until May 1, 1998, when Goldman Sachs Asset Management became
    the subadviser.
 
                                     II-12
<PAGE>
 
       PERCENT CHANGE IN UNIT VALUE AND ANNUAL EFFECTIVE RATE OF RETURN*
 
<TABLE>   
<CAPTION>
                                                              % CHANGE  ANNUAL
                                                              IN UNIT  EFFECTIVE
                                                               VALUE     RATE
                                                              -------- ---------
      <S>                                                     <C>      <C>
      4 years, 8 months ended December 31, 1997..............   92.8%    15.1%
      1 year ended December 31, 1997.........................   15.7%    15.7%
</TABLE>    
 
DAVIS VENTURE VALUE SUB-ACCOUNT
 
                      ANNUAL PERCENT CHANGE IN UNIT VALUE*
 
<TABLE>   
<CAPTION>
                                                             ACCUMULATION   %
      DATE                                                    UNIT VALUE  CHANGE
      ----                                                   ------------ ------
      <S>                                                    <C>          <C>
      October 31, 1994......................................   1.000000
      December 31, 1994.....................................    .962781    -3.7%
      December 31, 1995.....................................   1.322415    37.4%
      December 31, 1996.....................................   1.640833    24.1%
      December 31, 1997.....................................   2.160040    31.6%
</TABLE>    
 
       PERCENT CHANGE IN UNIT VALUE AND ANNUAL EFFECTIVE RATE OF RETURN*
 
<TABLE>   
<CAPTION>
                                                              % CHANGE  ANNUAL
                                                              IN UNIT  EFFECTIVE
                                                               VALUE     RATE
                                                              -------- ---------
      <S>                                                     <C>      <C>
      3 years, 2 months ended December 31, 1997..............  116.0%    27.5%
      1 year ended December 31, 1997.........................   31.6%    31.6%
</TABLE>    
 
WESTPEAK GROWTH AND INCOME SUB-ACCOUNT
 
                      ANNUAL PERCENT CHANGE IN UNIT VALUE*
 
<TABLE>   
<CAPTION>
                                                             ACCUMULATION   %
      DATE                                                    UNIT VALUE  CHANGE
      ----                                                   ------------ ------
      <S>                                                    <C>          <C>
      April 30, 1993........................................   1.000000
      December 31, 1993.....................................   1.131731    13.2%
      December 31, 1994.....................................   1.102569    -2.6%
      December 31, 1995.....................................   1.483784    34.6%
      December 31, 1996.....................................   1.727747    16.4%
      December 31, 1997.....................................   2.274012    31.6%
</TABLE>    
 
       PERCENT CHANGE IN UNIT VALUE AND ANNUAL EFFECTIVE RATE OF RETURN*
 
<TABLE>   
<CAPTION>
                                                              % CHANGE  ANNUAL
                                                              IN UNIT  EFFECTIVE
                                                               VALUE     RATE
                                                              -------- ---------
      <S>                                                     <C>      <C>
      4 years, 8 months ended December 31, 1997..............  127.4%    19.2%
      1 year ended December 31, 1997.........................   31.6%    31.6%
</TABLE>    
 
LOOMIS SAYLES BALANCED SUB-ACCOUNT
 
                      ANNUAL PERCENT CHANGE IN UNIT VALUE*
 
<TABLE>   
<CAPTION>
                                                             ACCUMULATION   %
      DATE                                                    UNIT VALUE  CHANGE
      ----                                                   ------------ ------
      <S>                                                    <C>          <C>
      October 31, 1994......................................   1.000000
      December 31, 1994.....................................    .996709     -.3%
      December 31, 1995.....................................   1.226569    23.1%
      December 31, 1996.....................................   1.413947    15.3%
      December 31, 1997.....................................   1.619885    14.6%
</TABLE>    
- --------
* Unit values do not reflect the impact of any Contingent Deferred Sales
  Charge, premium tax charge, or the annual Administration Contract Charge.
 
                                     II-13
<PAGE>
 
       PERCENT CHANGE IN UNIT VALUE AND ANNUAL EFFECTIVE RATE OF RETURN*
 
<TABLE>   
<CAPTION>
                                                              % CHANGE  ANNUAL
                                                              IN UNIT  EFFECTIVE
                                                               VALUE     RATE
                                                              -------- ---------
      <S>                                                     <C>      <C>
      3 years, 2 months ended December 31, 1997..............   62.0%    16.4%
      1 year ended December 31, 1997.........................   14.6%    14.6%
</TABLE>    
 
SALOMON BROTHERS STRATEGIC BOND OPPORTUNITIES SUB-ACCOUNT
 
                      ANNUAL PERCENT CHANGE IN UNIT VALUE*
 
<TABLE>   
<CAPTION>
                                                             ACCUMULATION   %
      DATE                                                    UNIT VALUE  CHANGE
      ----                                                   ------------ ------
      <S>                                                    <C>          <C>
      October 31, 1994......................................   1.000000
      December 31, 1994.....................................    .983769    -1.6%
      December 31, 1995.....................................   1.158151    17.7%
      December 31, 1996.....................................   1.305874    12.8%
      December 31, 1997.....................................   1.430333     9.5%
</TABLE>    
 
       PERCENT CHANGE IN UNIT VALUE AND ANNUAL EFFECTIVE RATE OF RETURN*
 
<TABLE>   
<CAPTION>
                                                              % CHANGE  ANNUAL
                                                              IN UNIT  EFFECTIVE
                                                               VALUE     RATE
                                                              -------- ---------
      <S>                                                     <C>      <C>
      3 years, 2 months ended December 31, 1997..............   43.0%    12.0%
      1 year ended December 31, 1997.........................    9.5%     9.5%
</TABLE>    
 
BACK BAY ADVISORS BOND INCOME SUB-ACCOUNT
 
                      ANNUAL PERCENT CHANGE IN UNIT VALUE*
 
<TABLE>   
<CAPTION>
                                                             ACCUMULATION   %
      DATE                                                    UNIT VALUE  CHANGE
      ----                                                   ------------ ------
      <S>                                                    <C>          <C>
      August 26, 1983.......................................   1.000000
      December 31, 1983.....................................   1.027018     2.7%
      December 31, 1984.....................................   1.140339    11.0%
      December 31, 1985.....................................   1.335435    17.1%
      December 31, 1986.....................................   1.512218    13.2%
      December 31, 1987.....................................   1.524994      .8%
      December 31, 1988.....................................   1.629605     6.9%
      December 31, 1989.....................................   1.804627    10.7%
      December 31, 1990.....................................   1.923323     6.6%
      December 31, 1991.....................................   2.237207    16.3%
      December 31, 1992.....................................   2.386470     6.7%
      December 31, 1993.....................................   2.650071    11.0%
      December 31, 1994.....................................   2.525427    -4.7%
      December 31, 1995.....................................   3.018347    19.5%
      December 31, 1996.....................................   3.113250     3.1%
      December 31, 1997.....................................   3.404265     9.3%
</TABLE>    
 
       PERCENT CHANGE IN UNIT VALUE AND ANNUAL EFFECTIVE RATE OF RETURN*
 
<TABLE>   
<CAPTION>
                                                              % CHANGE  ANNUAL
                                                              IN UNIT  EFFECTIVE
                                                               VALUE     RATE
                                                              -------- ---------
      <S>                                                     <C>      <C>
      14 years, 4 months ended December 31, 1997.............  240.4%     8.9%
      10 years ended December 31, 1997.......................  123.2%     8.4%
      5 years ended December 31, 1997........................   42.6%     7.4%
      1 year ended December 31, 1997.........................    9.3%     9.3%
</TABLE>    
- --------
* Unit values do not reflect the impact of any Contingent Deferred Sales
  Charge, premium tax charge, or the annual Administration Contract Charge.
 
                                     II-14
<PAGE>
 
SALOMON BROTHERS U.S. GOVERNMENT SUB-ACCOUNT
 
                      ANNUAL PERCENT CHANGE IN UNIT VALUE*
 
<TABLE>   
<CAPTION>
                                                             ACCUMULATION   %
      DATE                                                    UNIT VALUE  CHANGE
      ----                                                   ------------ ------
      <S>                                                    <C>          <C>
      October 31, 1994......................................   1.000000
      December 31, 1994.....................................   1.003688      .4%
      December 31, 1995.....................................   1.138448    13.4%
      December 31, 1996.....................................   1.159699     1.9%
      December 31, 1997.....................................   1.240432     7.0%
</TABLE>    
 
       PERCENT CHANGE IN UNIT VALUE AND ANNUAL EFFECTIVE RATE OF RETURN*
 
<TABLE>   
<CAPTION>
                                                              % CHANGE  ANNUAL
                                                              IN UNIT  EFFECTIVE
                                                               VALUE     RATE
                                                              -------- ---------
      <S>                                                     <C>      <C>
      3 years, 2 months ended December 31, 1997..............   24.0%     7.0%
      1 year ended December 31, 1997.........................    7.0%     7.0%
</TABLE>    
 
BACK BAY ADVISORS MONEY MARKET SUB-ACCOUNT
 
                      ANNUAL PERCENT CHANGE IN UNIT VALUE*
 
<TABLE>   
<CAPTION>
                                                             ACCUMULATION   %
      DATE                                                    UNIT VALUE  CHANGE
      ----                                                   ------------ ------
      <S>                                                    <C>          <C>
      August 26, 1983.......................................   1.000000
      December 31, 1983.....................................   1.026988    2.7%
      December 31, 1984.....................................   1.121296    9.2%
      December 31, 1985.....................................   1.197070    6.8%
      December 31, 1986.....................................   1.260740    5.3%
      December 31, 1987.....................................   1.324361    5.0%
      December 31, 1988.....................................   1.404131    6.0%
      December 31, 1989.....................................   1.512813    7.7%
      December 31, 1990.....................................   1.613903    6.7%
      December 31, 1991.....................................   1.690352    4.7%
      December 31, 1992.....................................   1.730096    2.4%
      December 31, 1993.....................................   1.756748    1.5%
      December 31, 1994.....................................   1.801180    2.5%
      December 31, 1995.....................................   1.877438    4.2%
      December 31, 1996.....................................   1.946086    3.7%
      December 31, 1997.....................................   2.021482    3.9%
</TABLE>    
 
       PERCENT CHANGE IN UNIT VALUE AND ANNUAL EFFECTIVE RATE OF RETURN*
 
<TABLE>   
<CAPTION>
                                                              % CHANGE  ANNUAL
                                                              IN UNIT  EFFECTIVE
                                                               VALUE     RATE
                                                              -------- ---------
      <S>                                                     <C>      <C>
      14 years, 4 months ended December 31, 1997.............  102.1%     5.0%
      10 years ended December 31, 1997.......................   52.6%     4.3%
      5 years ended December 31, 1997........................   16.8%     3.2%
      1 year ended December 31, 1997.........................    3.9%     3.9%
</TABLE>    
- --------
* Unit values do not reflect the impact of any Contingent Deferred Sales
  Charge, premium tax charge, or the annual Administration Contract Charge.
 
                                     II-15
<PAGE>
 
                             NET INVESTMENT FACTOR
 
  The Company determines the net investment factor ("Net Investment Factor")
for any sub-account on each day on which the New York Stock Exchange is open
for trading as follows:
 
    (1) The Company takes the net asset value per share of the Eligible Fund
  held in the sub-account determined as of the close of regular trading on
  the New York Stock Exchange on a particular day;
 
    (2) Next, the Company adds the per share amount of any dividend or
  capital gains distribution made by the Eligible Fund since the close of
  regular trading on the New York Stock Exchange on the preceding trading
  day.
 
    (3) This total amount is then divided by the net asset value per share of
  the Eligible Fund as of the close of regular trading on the New York Stock
  Exchange on the preceding trading day.
     
    (4) Finally, the Company subtracts the daily charges for the
  Administration Asset Charge and Mortality and Expense Risk Charge since the
  close of regular trading on the New York Stock Exchange on the preceding
  trading day. (See "Administration Charges, Contingent Deferred Sales Charge
  and Other Deductions" in the prospectus.) On an annual basis, the total
  deduction for such charges equals 1.40% of the daily net asset value of the
  Variable Account.     
 
                               ANNUITY PAYMENTS
 
  At annuitization, the Contract Value is applied toward the purchase of
monthly variable annuity payments. The amount of these payments will be
determined on the basis of (i) annuity purchase rates not lower than the rates
set forth in the Life Income Tables contained in the Contract that reflect the
age of the Payee at annuitization, (ii) the assumed interest rate selected,
(iii) the type of payment option selected, and (iv) the investment performance
of the Eligible Fund(s) selected.
 
  When a variable annuity payment option is selected, the Contract proceeds
will be applied at annuity purchase rates, which vary depending on the
particular option selected and the age of the Payee, to calculate the basic
payment level purchased by the Contract Value. With respect to Contracts
issued in New York or Oregon for use in situations not involving an employer-
sponsored plan, annuity purchase rates used to calculate the basic payment
level will also reflect the sex of the Payee when the annuity payment option
involves a life contingency. The impact of the choice of option and the sex
and age of the Payee on the level of annuity payments is described in the
prospectus under "Amount of Variable Annuity Payments."
 
  The amount of the basic payment level is determined by applying the
applicable annuity purchase rate to the amount applied from each sub-account
to provide the annuity. This basic payment level is converted into annuity
units, the number of which remains constant. Each monthly annuity payment is
in an amount equal to that number of annuity units multiplied by the
applicable annuity unit value for that payment (described below). The
applicable annuity unit value for each sub-account will change from day to day
depending upon the investment performance of the sub-account, which in turn
depends upon the investment performance of the Eligible Fund in which the sub-
account invests.
 
  The selection of an assumed interest rate ("Assumed Interest Rate") will
affect both the basic payment level and the amount by which subsequent
payments increase or decrease. The basic payment level is calculated on the
assumption that the Net Investment Factors applicable to the Contract will be
equivalent on an annual basis to a net investment return at the Assumed
Interest Rate. If this assumption is met following the date any payment is
determined, then the amount of the next payment will be exactly equal to the
amount of the preceding payment. If the actual Net Investment Factors are
equivalent to a net investment return greater than the Assumed Interest Rate,
the next payment will be larger than the preceding one; if the actual Net
Investment Factors are equivalent to a net investment return smaller than the
Assumed Interest Rate, then the next payment will be smaller than the
preceding
 
                                     II-16
<PAGE>
 
payment. The definition of the Assumed Interest Rate, and the effect of the
level of the Assumed Interest Rate on the amount of monthly payments is
explained in the prospectus under "Amount of Variable Annuity Payments."
 
  The number of annuity units credited under a variable payment option is
determined as follows:
 
    (1) The Contract proceeds are applied at the Company's annuity purchase
  rates for the selected Assumed Interest Rate to determine the basic payment
  level. (The amount of Contract Value or Death Proceeds applied will be
  reduced by any applicable Contingent Deferred Sales Charge, Administration
  Contract Charge, premium tax charge, and/or any outstanding loan plus
  accrued interest, as described in the prospectus.)
 
    (2) The number of annuity units is determined by dividing the amount of
  the basic payment level by the applicable annuity unit value(s) next
  determined following the date of application of proceeds.
 
  The dollar amount of the initial payment will be at the basic payment level.
(If the initial payment is due more than 14 days after the proceeds are
applied, the Company will add interest to that initial payment.) The dollar
amount of each subsequent payment is determined by multiplying the number of
annuity units by the applicable annuity unit value which is determined at
least 14 days before the payment is due.
 
  The value of an annuity unit for each sub-account depends on the Assumed
Interest Rate and on the Net Investment Factors applicable at the time of
valuation. The initial annuity unit values were set at $1.00 effective on or
about the date on which shares of the corresponding Eligible Funds were first
publicly available. The Net Investment Factor and, therefore, changes in the
value of an annuity unit under a variable payment option, reflect the
deduction of the Mortality and Expense Risk Charge and Administration Asset
Charge. (See "Net Investment Factor" above.)
 
  The annuity unit value for each sub-account is equal to the corresponding
annuity unit value for the sub-account previously determined multiplied by the
applicable Net Investment Factor for that sub-account for the New York Stock
Exchange trading day then ended, and further multiplied by the assumed
interest factor ("Assumed Interest Factor") for each day of the valuation
period. The Assumed Interest Factor represents the daily equivalent of the
Contract's annual Assumed Interest Rate. In the calculation of annuity unit
values, the Assumed Interest Factor has the effect of reducing the Net
Investment Factor by an amount equal to the daily equivalent of the Contract's
Assumed Interest Rate. The result of this adjustment is that if the Net
Investment Factor for a valuation period is greater (when expressed as an
annual net investment return) than the Assumed Interest Rate, the annuity unit
value will increase. If the Net Investment Factor for the period is less (when
expressed as an annual net investment return) than the Assumed Interest Rate,
the annuity unit value will decrease. At an Assumed Interest Rate of 3.5%, the
Assumed Interest Factor is .9999058. Assumed Interest Factors for other
Assumed Interest Rates are computed on a consistent basis.
   
  Illustrations of annuity income payments under various hypothetical and
historical rates appear in the tables below. The monthly equivalents of the
hypothetical annual net returns of (2.21%), 3.50%, 3.66%, 5.62% and 7.57%
shown in the tables at pages II-19 and II-20 are -0.2%, 0.3%, 0.3%, 0.5% and
0.6%.     
 
             HYPOTHETICAL ILLUSTRATIONS OF ANNUITY INCOME PAYOUTS
   
  The following tables have been prepared to show how variable annuity income
payments under the Contract change with investment performance over an
extended period of time. The tables illustrate how monthly annuity income
payments would vary over time if the return on assets in the selected
portfolios were a uniform gross annual rate of 0%, 5.84%, 6%, 8% or 10%. The
values would be different from those shown if the returns averaged 0%, 5.84%,
6%, 8% or 10%, but fluctuated over and under those averages throughout the
years.     
   
  The tables reflect the daily charge to the sub-accounts for assuming
mortality and expense risks, which is equivalent to an annual charge of 1.30%
and the daily administrative charge which is equivalent to an annual charge of
0.10%. The amounts shown in the tables also take into account the portfolios'
management fees and operating     
 
                                     II-17
<PAGE>
 
expenses which are assumed to be at an annual rate of 0.83% of the average
daily net assets of the Eligible Funds. Actual fees and expenses of the
portfolios associated with your Contract may be more or less than 0.83%, will
vary from year to year, and will depend on how you allocate your Contract
Value. See the section in your current prospectus entitled "Expense Table" for
more complete details. The monthly annuity income payments illustrated are on
a pre-tax basis. The federal income tax treatment of annuity income
considerations is generally described in the section of your current
prospectus entitled "Federal Income Tax Status."
   
  The tables show both the gross rate and the net rate. The difference between
gross and net rates represents the 1.40% for mortality and expense risk and
administrative charges and the assumed 0.83% for investment management and
operating expenses. Since these charges are deducted daily from assets, the
difference between the gross and net rate is not exactly 2.23%.     
 
  Three tables follow. The first table assumes that 100% of the Contract Value
is allocated to a variable annuity income option. The second assumes that 50%
of the Contract Value is placed under a fixed annuity income option, using the
fixed crediting rate the Company offered on the fixed annuity income option at
the date of the illustration with annuitization occurring within the first two
years. The third assumes that 50% of the Contract Value is placed under a
fixed annuity income option, using the fixed crediting rate the Company
offered on the fixed annuity income option at the date of the illustration,
with annuitization occurring after the second year. Both illustrations assume
that the final value of the accumulation account is $100,000 and is applied at
age 65 to purchase a life annuity for a guaranteed period of 10 years certain
and life thereafter.
 
  When part of the Contract Value has been allocated to the fixed annuity
income option, the guaranteed minimum annuity income payment resulting from
this allocation is also shown. The illustrated variable annuity income
payments are determined through the use of standard mortality tables and an
assumed interest rate of 3.5% per year. Thus, actual performance greater than
3.5% per year will result in increasing annuity income payments and actual
performance less than 3.5% per year will result in decreasing annuity income
payments. The Company offers alternative Assumed Interest Rates from which you
may select. Fixed annuity income payments remain constant. Initial monthly
annuity income payments under a fixed annuity income payout are generally
higher than initial payments under a variable income payout option.
 
  These tables show the monthly income payments for several hypothetical
constant assumed interest rates. Of course, actual investment performance will
not be constant and may be volatile. Actual monthly income amounts would
differ from those shown if the actual rate of return averaged the rate shown
over a period of years, but also fluctuated above or below those averages for
individual contract years. Upon request, and when you are considering an
annuity income option, the Company will furnish a comparable illustration
based on your individual circumstances.
 
                                     II-18
<PAGE>
 
                         ANNUITY PAY-OUT ILLUSTRATION
                            (100% VARIABLE PAYOUT)
 
<TABLE>   
<S>                       <C>        <C>                                 <C>
ANNUITANT:                John Doe   GROSS AMOUNT OF CONTRACT VALUE:     $100,000
SEX:                      Unisex     DATE OF ILLUSTRATION:                 6/1/98
ANNUITY OPTION SELECTED:  Life Income with 10 Years Certain*
FREQUENCY OF INCOME PAY-  Monthly
 MENTS:
</TABLE>    
   
FIXED MONTHLY ANNUITY INCOME PAYMENT BASED ON CURRENT RATES, IF 100% FIXED
ANNUITY OPTION SELECTED WITHIN THE FIRST TWO YEARS: For age 65: $633.06     
   
FIXED MONTHLY ANNUITY INCOME PAYMENT BASED ON CURRENT RATES, IF 100% FIXED
ANNUITY OPTION SELECTED AFTER TWO YEARS: For age 65: $646.99     
 
ILLUSTRATIVE AMOUNTS BELOW ASSUME THAT 100% OF THE CONTRACT VALUE IS ALLOCATED
TO VARIABLE PAYOUT.
 
ASSUMED INTEREST RATE AT WHICH MONTHLY VARIABLE PAYMENTS REMAIN CONSTANT: 3.5%
 
VARIABLE MONTHLY ANNUITY INCOME PAYMENT ON THE DATE OF THE
ILLUSTRATION: $581.00
 
MONTHLY INCOME PAYMENTS WILL VARY WITH INVESTMENT PERFORMANCE. NO MINIMUM
DOLLAR AMOUNT IS GUARANTEED.
 
<TABLE>   
<CAPTION>
                            AMOUNT OF FIRST MONTHLY PAYMENT IN YEAR SHOWN
                                  WITH AN ASSUMED RATE OF RETURN OF:
                            ----------------------------------------------
                      GROSS    0%     5.84%      6%       8%       10%
PAYMENT  CALENDAR     ----- ----------------- -------- -------- ----------
 YEAR      YEAR   AGE NET** (2.21)%   3.50%    3.66%    5.62%     7.57%
- -------  -------- --- ----- ----------------- -------- -------- ----------
<S>      <C>      <C> <C>   <C>      <C>      <C>      <C>      <C>
    1      1998    65       $ 581.00 $ 581.00 $ 581.00 $ 581.00 $   581.00
    2      1999    66         548.96   581.00   581.90   592.88     603.86
    3      2000    67         518.68   581.00   582.80   605.00     627.61
    4      2001    68         490.08   581.00   583.70   617.36     652.30
    5      2002    69         463.05   581.00   584.60   629.99     677.97
   10      2007    74         348.69   581.00   589.13   697.06     822.24
   15      2012    79         262.58   581.00   593.69   771.29     997.21
   20      2017    84         197.73   581.00   598.29   853.41   1,209.42
</TABLE>    
 
IT IS EMPHASIZED THAT THE ASSUMED RATES OF RETURN SHOWN ABOVE ARE ILLUSTRATIVE
ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE PERFORMANCE.
ACTUAL PERFORMANCE RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL
DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY
THE CONTRACT OWNER AND THE VARIOUS RATES OF RETURN OF THE PORTFOLIOS SELECTED.
THE AMOUNT OF THE INCOME PAYMENT WOULD BE DIFFERENT FROM THAT SHOWN IF THE
ACTUAL PERFORMANCE AVERAGED THE ASSUMED RATES OF RETURN SHOWN ABOVE OVER A
PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR
INDIVIDUAL CONTRACT YEARS. SINCE IT IS HIGHLY LIKELY THAT THE PERFORMANCE WILL
FLUCTUATE FROM MONTH TO MONTH, MONTHLY INCOME (BASED ON THE VARIABLE ACCOUNT)
WILL ALSO FLUCTUATE. NO REPRESENTATION CAN BE MADE BY THE COMPANY OR THE FUNDS
THAT THIS HYPOTHETICAL PERFORMANCE CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
- -------
 * Income payments are made during the Annuitant's lifetime. If the Annuitant
   dies before payments have been made for the 10 Year Certain Period,
   payments will be continued for the balance of the Certain Period. The
   cumulative amount of income payments received under the annuity depends on
   how long the Annuitant lives after the Certain Period. An annuity pools the
   mortality experience of Annuitants. Annuitants who die earlier, in effect,
   subsidize the payments for those who live longer.
   
** The illustrated Net Assumed Rates of Return reflect the deduction of
   average fund expenses and the 1.40% Mortality and Expense Risk and
   Administration Asset Charges from the Gross Rates of Return.     
 
                                     II-19
<PAGE>
 
     ANNUITY PAY-OUT ILLUSTRATION, ANNUITIZATION OCCURING WITHIN TWO YEARS
                       (50% VARIABLE--50% FIXED PAYOUT)
 
<TABLE>   
<S>                       <C>        <C>                                 <C>
ANNUITANT:                John Doe   GROSS AMOUNT OF CONTRACT VALUE:     $100,000
SEX:                      Unisex     DATE OF ILLUSTRATION:                 6/1/98
ANNUITY OPTION SELECTED:  Life Income with 10 Years Certain*
FREQUENCY OF INCOME PAY-  Monthly
 MENTS:
</TABLE>    
   
FIXED MONTHLY ANNUITY INCOME PAYMENT FOR AGE 65 BASED ON CURRENT RATES, IF
100% FIXED ANNUITY OPTION SELECTED: $633.06     
 
ILLUSTRATIVE AMOUNTS BELOW ASSUME THAT 50% OF THE CONTRACT VALUE IS ALLOCATED
TO VARIABLE PAYOUT
 
ASSUMED INTEREST RATE AT WHICH MONTHLY VARIABLE PAYMENTS REMAIN CONSTANT: 3.5%
   
MONTHLY INCOME PAYMENTS WILL VARY WITH INVESTMENT PERFORMANCE, BUT WILL NEVER
BE LESS THAN:  $316.53. THE MONTHLY GUARANTEED PAYMENT OF $316.53 IS BEING
PROVIDED BY THE $50,000 APPLIED UNDER THE FIXED ANNUITY OPTION.     
 
<TABLE>   
<CAPTION>
                              AMOUNT OF FIRST MONTHLY PAYMENT IN YEAR SHOWN
                                   WITH AN ASSUMED RATE OF RETURN OF:
                            -------------------------------------------------
                      GROSS    0%       5.84%      6%        8%        10%
PAYMENT  CALENDAR     ----- ------------------- --------- --------- ---------
 YEAR      YEAR   AGE NET**  (2.21)%    3.50%     3.66%     5.62%     7.57%
- -------  -------- --- ----- ------------------- --------- --------- ---------
<S>      <C>      <C> <C>   <C>       <C>       <C>       <C>       <C>
    1      1998    65       $  607.03 $  607.03 $  607.03 $  607.03 $  607.03
    2      1999    66          591.01    607.03    607.48    612.97    618.46
    3      2000    67          575.87    607.03    607.93    619.03    630.34
    4      2001    68          561.57    607.03    608.38    625.21    642.68
    5      2002    69          548.05    607.03    608.83    631.52    655.51
   10      2007    74          490.88    607.03    611.09    665.06    727.65
   15      2012    79          447.82    607.03    613.37    702.17    815.14
   20      2017    84          415.39    607.03    615.67    743.24    921.24
</TABLE>    
 
IT IS EMPHASIZED THAT THE ASSUMED RATES OF RETURN SHOWN ABOVE ARE ILLUSTRATIVE
ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE PERFORMANCE.
ACTUAL PERFORMANCE RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL
DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY
THE CONTRACT OWNER AND THE VARIOUS RATES OF RETURN OF THE PORTFOLIOS SELECTED.
THE AMOUNT OF THE INCOME PAYMENT WOULD BE DIFFERENT FROM THAT SHOWN IF THE
ACTUAL PERFORMANCE AVERAGED THE ASSUMED RATES OF RETURN SHOWN ABOVE OVER A
PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR
INDIVIDUAL CONTRACT YEARS. SINCE IT IS HIGHLY LIKELY THAT THE PERFORMANCE WILL
FLUCTUATE FROM MONTH TO MONTH, MONTHLY INCOME (BASED ON THE VARIABLE ACCOUNT)
WILL ALSO FLUCTUATE. NO REPRESENTATION CAN BE MADE BY THE COMPANY OR THE FUNDS
THAT THIS HYPOTHETICAL PERFORMANCE CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
- -------
 * Income payments are made during the Annuitant's lifetime. If the Annuitant
   dies before payments have been made for the 10 Year Certain Period,
   payments will be continued for the balance of the Certain Period. The
   cumulative amount of income payments received under the annuity depends on
   how long the Annuitant lives after the Certain Period. An annuity pools the
   mortality experience of Annuitants. Annuitants who die earlier, in effect,
   subsidize the payments for those who live longer.
   
** The illustrated Net Assumed Rates of Return apply only to the variable
   portion of the monthly payment and reflect the deduction of average fund
   expenses and the 1.40% Mortality and Expense Risk and Administration Asset
   Charges from the Gross Rate of Return.     
 
                                     II-20
<PAGE>
 
     ANNUITY PAY-OUT ILLUSTRATION, ANNUITIZATION OCCURING AFTER TWO YEARS
                       (50% VARIABLE--50% FIXED PAYOUT)
 
<TABLE>   
<S>                       <C>        <C>                                 <C>
ANNUITANT:                John Doe   GROSS AMOUNT OF CONTRACT VALUE:     $100,000
SEX:                      Unisex     DATE OF ILLUSTRATION:                 6/1/98
ANNUITY OPTION SELECTED:  Life Income with 10 Years Certain*
FREQUENCY OF INCOME PAY-  Monthly
 MENTS:
</TABLE>    
   
FIXED MONTHLY ANNUITY INCOME PAYMENT FOR AGE 65 BASED ON CURRENT RATES, IF
100% FIXED ANNUITY OPTION SELECTED: $646.99     
 
ILLUSTRATIVE AMOUNTS BELOW ASSUME THAT 50% OF THE CONTRACT VALUE IS ALLOCATED
TO VARIABLE PAYOUT
 
ASSUMED INTEREST RATE AT WHICH MONTHLY VARIABLE PAYMENTS REMAIN CONSTANT: 3.5%
   
MONTHLY INCOME PAYMENTS WILL VARY WITH INVESTMENT PERFORMANCE, BUT WILL NEVER
BE LESS THAN: $323.50. THE MONTHLY GUARANTEED PAYMENT OF $323.50 IS BEING
PROVIDED BY THE $50,000 APPLIED UNDER THE FIXED ANNUITY OPTION.     
 
<TABLE>   
<CAPTION>
                              AMOUNT OF FIRST MONTHLY PAYMENT IN YEAR SHOWN
                                   WITH AN ASSUMED RATE OF RETURN OF:
                            -------------------------------------------------
                      GROSS    0%       5.84%      6%        8%        10%
PAYMENT  CALENDAR     ----- ------------------- --------- --------- ---------
 YEAR      YEAR   AGE NET**  (2.21)%    3.50%     3.66%     5.62%     7.57%
- -------  -------- --- ----- ------------------- --------- --------- ---------
<S>      <C>      <C> <C>   <C>       <C>       <C>       <C>       <C>
    1      1998    65       $  614.00 $  614.00 $  614.00 $  614.00 $  614.00
    2      1999    66          597.97    614.00    614.44    619.93    625.42
    3      2000    67          582.84    614.00    614.89    625.99    637.30
    4      2001    68          568.53    614.00    615.34    632.18    649.65
    5      2002    69          555.02    614.00    615.79    638.49    662.48
   10      2007    74          497.84    614.00    618.06    672.03    734.61
   15      2012    79          454.78    614.00    620.34    709.14    822.10
   20      2017    84          422.36    614.00    622.64    750.20    928.21
</TABLE>    
 
IT IS EMPHASIZED THAT THE ASSUMED RATES OF RETURN SHOWN ABOVE ARE ILLUSTRATIVE
ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE PERFORMANCE.
ACTUAL PERFORMANCE RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL
DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY
THE CONTRACT OWNER AND THE VARIOUS RATES OF RETURN OF THE PORTFOLIOS SELECTED.
THE AMOUNT OF THE INCOME PAYMENT WOULD BE DIFFERENT FROM THAT SHOWN IF THE
ACTUAL PERFORMANCE AVERAGED THE ASSUMED RATES OF RETURN SHOWN ABOVE OVER A
PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR
INDIVIDUAL CONTRACT YEARS. SINCE IT IS HIGHLY LIKELY THAT THE PERFORMANCE WILL
FLUCTUATE FROM MONTH TO MONTH, MONTHLY INCOME (BASED ON THE VARIABLE ACCOUNT)
WILL ALSO FLUCTUATE. NO REPRESENTATION CAN BE MADE BY THE COMPANY OR THE FUNDS
THAT THIS HYPOTHETICAL PERFORMANCE CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
- -------
 * Income payments are made during the Annuitant's lifetime. If the Annuitant
   dies before payments have been made for the 10 Year Certain Period,
   payments will be continued for the balance of the Certain Period. The
   cumulative amount of income payments received under the annuity depends on
   how long the Annuitant lives after the Certain Period. An annuity pools the
   mortality experience of Annuitants. Annuitants who die earlier, in effect,
   subsidize the payments for those who live longer.
   
** The illustrated Net Assumed Rates of Return apply only to the variable
   portion of the monthly payment and reflect the deduction of average fund
   expenses and the 1.40% Mortality and Expense Risk and Administration Asset
   Charges from the Gross Rate of Return.     
 
 
                                     II-21
<PAGE>
 
              HISTORICAL ILLUSTRATIONS OF ANNUITY INCOME PAYOUTS
 
  The following tables have been prepared to show how variable annuity income
payments under the Contract change with investment performance over an
extended period of time. In comparison with hypothetical illustrations based
on a uniform annual rate of return, the table uses historical annual returns
to illustrate that monthly annuity income payments vary over time based on
fluctuations in annual returns.
   
  The tables reflect the daily charge to the sub-accounts for assuming
mortality and expense risks, which is equivalent to an annual charge of 1.30%
and the daily administrative charge which is equivalent to an annual charge of
0.10%. The amounts shown in the tables also take into account the actual
portfolios' management fees and operating expenses. Actual fees and expenses
of the portfolios associated with your Contract may be more or less than the
historical fees, will vary from year to year, and will depend on how you
allocate your Contract Value. See the section in your current prospectus
entitled "Expense Table" for more complete details. The monthly annuity income
payments illustrated are on a pre-tax basis. The federal income tax treatment
of annuity income considerations is generally described in the section of your
current prospectus entitled "Federal Income Tax Status."     
 
  The following tables assume that 100% of the Contract Value is allocated to
a variable annuity income option, that the final value of the accumulation
account is $100,000 and is applied at age 65 to purchase a life annuity for a
guaranteed period of 10 years certain and life thereafter. The table assumes
that the Annuitant was age 65 in 1983, the year of inception for the Bond
Income and Money market portfolios, and that the Annuitant's age has increased
by the time the other portfolios became available. The historical variable
annuity income payments are based on an assumed interest rate of 3.5% per
year. Thus, actual performance greater than 3.5% per year resulted in an
increased annuity income payment and actual performance less than 3.5% per
year resulted in a decreased annuity income payment. We offer alternative
Assumed Interest Rates (AIR) from which you may select: 0% and 5%. An AIR of
0% will result in a lower initial payment than a 3.5% or 5% AIR. Similarly, an
AIR of 5% will result in a higher initial payment than a 0% or 3.5% AIR.
 
  The table illustrates the amount of the first monthly payment for each year
shown. During each year, the monthly payments would vary to reflect
fluctuations in the actual rate of return on the portfolios. Upon request, and
when you are considering an annuity income option, we will furnish a
comparable illustration based on your individual circumstances.
 
                                     II-22
<PAGE>
 
                    ANNUITY PAY-OUT HISTORICAL ILLUSTRATION
                            (100% VARIABLE PAYOUT)
 
<TABLE>   
<S>                       <C>        <C>                                 <C>
ANNUITANT:                John Doe   GROSS AMOUNT OF CONTRACT VALUE:     $100,000
SEX:                      Unisex     DATE OF ILLUSTRATION:                 6/1/98
ANNUITY OPTION SELECTED:  Life Income with 10 Years Certain*
FREQUENCY OF INCOME PAY-  Monthly
 MENTS:
</TABLE>    
   
FIXED MONTHLY ANNUITY INCOME PAYMENT BASED ON CURRENT RATES, IF 100% FIXED
ANNUITY OPTION SELECTED WITHIN THE FIRST TWO YEARS: FOR AGE 75: $765.80 AND
FOR AGE 76: $781.55.     
   
FIXED MONTHLY ANNUITY INCOME PAYMENT BASED ON CURRENT RATES, IF 100% FIXED
ANNUITY OPTION SELECTED AFTER TWO YEARS: FOR AGE 75: $782.65 AND FOR AGE 76:
$798.75.     
 
ILLUSTRATIVE AMOUNTS BELOW ASSUME THAT 100% OF THE CONTRACT VALUE IS ALLOCATED
TO VARIABLE PAYOUT.
 
ASSUMED INTEREST RATE AT WHICH MONTHLY VARIABLE PAYMENTS REMAIN CONSTANT:
3.50%
 
MONTHLY INCOME PAYMENTS WILL VARY WITH INVESTMENT PERFORMANCE. NO MINIMUM
DOLLAR AMOUNT IS GUARANTEED.
 
              AMOUNT OF FIRST MONTHLY PAYMENT IN YEAR SHOWN WITH
                    100% OF THE CONTRACT VALUE INVESTED IN:
 
<TABLE>   
<CAPTION>
                       LOOMIS      MORGAN                GOLDMAN            WESTPEAK
                       SAYLES      STANLEY      ALGER     SACHS     DAVIS    GROWTH
PAYMENT  CALENDAR       SMALL   INTERNATIONAL  EQUITY    MIDCAP    VENTURE     AND
 YEAR      YEAR   AGE    CAP       MAGNUM      GROWTH    VALUE**    VALUE    INCOME
- -------  -------- --- --------- ------------- --------- --------- --------- ---------
<S>      <C>      <C> <C>       <C>           <C>       <C>       <C>       <C>
    1      1983    65
    2      1984    66
    3      1985    67
    4      1986    68
    5      1987    69
    6      1988    70
    7      1989    71
    8      1990    72
    9      1991    73
   10      1992    74
   11      1993    75                                   $  747.00           $  747.00
   12      1994    76 $  765.00    $765.00    $  765.00    829.70 $  765.00    826.11
   13      1995    77    733.51     778.64       737.36    788.39    732.33    777.60
   14      1996    78    900.48     788.12     1,044.66    979.16    971.87  1,011.07
   15      1997    79  1,120.95     800.83     1,126.19  1,096.94  1,165.00  1,137.39
   16      1998    80  1,333.42     753.08     1,347.99  1,226.15  1,481.77  1,446.38
</TABLE>    
 
INVESTMENT PERFORMANCE RESULTS CONTAINED IN THIS REPORT REPRESENT PAST
PERFORMANCE AND ARE NOT INDICATIVE OF FUTURE RETURNS. THE PERFORMANCE RESULTS
OF A CONTRACT MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER
OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY THE CONTRACT OWNER
AND THE VARIOUS RATES OF RETURN OF THE PORTFOLIOS SELECTED, SINCE IT IS HIGHLY
LIKELY THAT PERFORMANCE WILL FLUCTUATE FROM MONTH TO MONTH, MONTHLY INCOME
(BASED ON THE VARIABLE ACCOUNT) WILL ALSO FLUCTUATE. NO REPRESENTATION CAN BE
MADE BY THE COMPANY OR THE FUNDS THAT THESE HISTORICAL RETURNS CAN BE ACHIEVED
FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
   
THE PAYMENTS IN THIS ILLUSTRATION ARE NET OF ALL CHARGES: MORTALITY AND
EXPENSE RISK CHARGE AND ADMINISTRATION ASSET CHARGE (1.40%), MANAGEMENT FEES
AND OTHER EXPENSES (These may vary from year to year. The following expenses
are for the year ended December 31, 1997, after giving effect to current
expense caps or deferrals: 1.00% Loomis Sayles Small Cap, 1.30% Morgan Stanley
International Magnum, 0.87% Alger Equity Growth, 0.85% Goldman Sachs Midcap
Value, 0.90% Davis Venture Value, 0.82% Westpeak Growth and Income, 0.85%
Loomis Sayles Balanced, 0.85% Salomon Strategic Bond Opportunities, 0.52% Back
Bay Bond Income, 0.70% Salomon US Government, 0.45% Back Bay Money Market.)
Effective May 1, 1998 the Goldman Sachs Midcap Value Series is subject to a
voluntary expense deferral arrangement with an annual expense limit of .90% of
net assets.     
- -------
*  Income payments are made during the Annuitant's lifetime. If the Annuitant
   dies before payments have been made for the 10 Year Certain Period,
   payments will be continued for the balance of the Certain Period. The
   cumulative amount of income payments received under the annuity depends on
   how long the Annuitant lives after the Certain Period. An annuity pools the
   mortality experience of Annuitants. Annuitants who die earlier, in effect,
   subsidize the payments for those who live longer.
** Rates of return and Contract Values and benefits shown reflect the Goldman
   Sachs Midcap Value Series' investment advisory fee of .70% of average daily
   net assets. Beginning May 1, 1998 the Series' advisory fee is .75%.
 
                                     II-23
<PAGE>
 
                    ANNUITY PAY-OUT HISTORICAL ILLUSTRATION
                            (100% VARIABLE PAYOUT)
 
<TABLE>   
<S>                       <C>        <C>                                 <C>
ANNUITANT:                John Doe   GROSS AMOUNT OF CONTRACT VALUE:     $100,000
SEX:                      Unisex     DATE OF ILLUSTRATION:                 6/1/98
ANNUITY OPTION SELECTED:  Life Income with 10 Years Certain*
FREQUENCY OF INCOME PAY-  Monthly
 MENTS:
</TABLE>    
   
FIXED MONTHLY ANNUITY INCOME PAYMENT BASED ON CURRENT RATES, IF 100% FIXED
ANNUITY OPTION SELECTED WITHIN THE FIRST TWO YEARS: FOR AGE 65: $633.06; FOR
AGE 75: $765.80 AND FOR AGE 76: $781.55.     
   
FIXED MONTHLY ANNUITY INCOME PAYMENT BASED ON CURRENT RATES, IF 100% FIXED
ANNUITY OPTION SELECTED AFTER TWO YEARS: FOR AGE 65: $646.99; FOR AGE 75:
$782.65 AND FOR AGE 76: $798.75.     
 
ILLUSTRATIVE AMOUNTS BELOW ASSUME THAT 100% OF THE CONTRACT VALUE IS ALLOCATED
TO VARIABLE PAYOUT.
 
ASSUMED INTEREST RATE AT WHICH MONTHLY VARIABLE PAYMENTS REMAIN CONSTANT:
3.50%
 
MONTHLY INCOME PAYMENTS WILL VARY WITH INVESTMENT PERFORMANCE. NO MINIMUM
DOLLAR AMOUNT IS GUARANTEED.
 
              AMOUNT OF FIRST MONTHLY PAYMENT IN YEAR SHOWN WITH
                    100% OF THE CONTRACT VALUE INVESTED IN:
 
<TABLE>   
<CAPTION>
                                   SALOMON
                       LOOMIS     STRATEGIC   BACK BAY  SALOMON   BACK BAY
PAYMENT  CALENDAR      SAYLES       BOND        BOND      U.S.     MONEY
 YEAR      YEAR   AGE BALANCED  OPPORTUNITIES  INCOME  GOVERNMENT  MARKET
- -------  -------- --- --------- ------------- -------- ---------- --------
<S>      <C>      <C> <C>       <C>           <C>      <C>        <C>
    1      1983    65                         $ 581.00            $581.00
    2      1984    66                           593.75             589.11
    3      1985    67                           636.91             621.40
    4      1986    68                           720.66             640.96
    5      1987    69                           788.46             652.22
    6      1988    70                           768.23             661.97
    7      1989    71                           793.10             678.04
    8      1990    72                           848.57             705.82
    9      1991    73                           873.81             727.52
   10      1992    74                           982.04             736.22
   11      1993    75                         1,012.04             727.98
   12      1994    76 $  765.00    $765.00    1,085.82  $765.00    714.19
   13      1995    77    758.14     748.30      999.76   763.45    707.50
   14      1996    78    901.43     851.15    1,154.49   836.67    712.51
   15      1997    79  1,003.91     927.17    1,150.41   823.39    713.52
   16      1998    80  1,111.23     981.20    1,215.41   850.93    716.10
</TABLE>    
 
INVESTMENT PERFORMANCE RESULTS CONTAINED IN THIS REPORT REPRESENT PAST
PERFORMANCE AND ARE NOT INDICATIVE OF FUTURE RETURNS. THE PERFORMANCE RESULTS
OF A CONTRACT MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER
OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY THE CONTRACT OWNER
AND THE VARIOUS RATES OF RETURN OF THE PORTFOLIOS SELECTED, SINCE IT IS HIGHLY
LIKELY THAT PERFORMANCE WILL FLUCTUATE FROM MONTH TO MONTH, MONTHLY INCOME
(BASED ON THE VARIABLE ACCOUNT) WILL ALSO FLUCTUATE. NO REPRESENTATION CAN BE
MADE BY THE COMPANY OR THE FUNDS THAT THESE HISTORICAL RETURNS CAN BE ACHIEVED
FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
   
THE PAYMENTS IN THIS ILLUSTRATION ARE NET OF ALL CHARGES: MORTALITY AND
EXPENSE RISK CHARGE AND ADMINISTRATION ASSET CHARGE (1.40%), MANAGEMENT FEES
AND OTHER EXPENSES (These may vary from year to year. The following expenses
are for the year ended December 31, 1997, after giving effect to expense caps
or deferrals: 1.00% Loomis Sayles Small Cap, 1.30% Morgan Stanley
International Magnum, 0.87% Alger Equity Growth, 0.85% Goldman Sachs Midcap
Value, 0.90% Davis Venture Value, 0.82% Westpeak Growth and Income, 0.85%
Loomis Sayles Balanced, 0.85% Salomon Strategic Bond Opportunities, 0.52% Back
Bay Bond Income, 0.70% Salomon US Government, 0.40% Back Bay Money Market.)
Effective May 1, 1998 the Goldman Sachs Midcap Value Series is subject to a
voluntary expense deferral arrangement with an annual expense limit of .90% of
net assets.     
- -------
 * Income payments are made during the Annuitant's lifetime. If the Annuitant
   dies before payments have been made for the 10 Year Certain Period,
   payments will be continued for the balance of the Certain Period. The
   cumulative amount of income payments received under the annuity depends on
   how long the Annuitant lives after the Certain Period. An annuity pools the
   mortality experience of Annuitants. Annuitants who die earlier, in effect,
   subsidize the payments for those who live longer.
** Rates of return and Contract values and benefits shown reflect the Goldman
   Sachs Midcap Value Series' investment advisory fee of .70% of average daily
   net assets. Beginning May 1, 1998 the Series' advisory fee is .75%.
 
                                     II-24
<PAGE>
 
                                    EXPERTS
 
  The financial statements of New England Variable Annuity Separate Account of
New England Life Insurance Company ("NELICO") (formerly New England Variable
Life Insurance Company) and the consolidated financial statements of NELICO
and subsidiaries as of and for the year ended December 31, 1996 and December
31, 1997 included in this Statement of Additional Information have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
reports appearing herein (whose reports express unqualified opinions and, with
respect to NELICO, includes an explanatory paragraph referring to the change
in the basis of accounting and the change in corporate organization), and have
been so included in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing. The adjustments that were
applied to restate the 1995 financial statements to reflect the effects of the
changes for adoption of generally accepted accounting principles and the
changes in corporate organization have also been audited by Deloitte & Touche
LLP.
       

   
  The statutory statements of operations, surplus, and cash flows of New
England Variable Life Insurance Company and New England Pension and Annuity
Company for the year ended December 31, 1995 (not included herein), have been
incorporated herein in reliance on the reports (which reports include adverse
opinions as to generally accepted accounting principles and unqualified
opinions as to statutory accounting practices prescribed or permitted by the
Insurance Department of the State of Delaware) of Coopers & Lybrand L.L.P.,
independent accountants, given on the authority of that firm as experts in
accounting and auditing. The statutory statements of operations and surplus,
and cash flows of Exeter Reassurance Company, Ltd. for the year ended December
31, 1995 (not included herein), have been incorporated herein in reliance on
the report (which report includes an adverse opinion as to generally accepted
accounting principles and an unqualified opinion as to conformity with The
Insurance Act 1978, amendments thereto and related regulations) of Coopers &
Lybrand, chartered accountants, given on the authority of that firm as experts
in accounting and auditing.     
   
  The consolidated statements of operations, shareholder's equity, and cash
flows of New England Securities Corporation for the year ended December 31,
1995 (not included herein); the statements of operations, changes in
shareholder's equity, and cash flows of TNE Advisers, Inc. for the year ended
December 31, 1995 (not included herein), have been incorporated herein in
reliance on the reports of Coopers & Lybrand L.L.P., independent accountants,
given on the authority of that firm as experts in accounting and auditing. The
statements of earnings and retained earnings and cash flows of Newbury
Insurance Company, Limited for the year ended December 31, 1995 (not included
herein), have been incorporated herein in reliance on the report of Coopers &
Lybrand, chartered accountants, given on the authority of that firm as experts
in accounting and auditing.     
 
                                 LEGAL MATTERS
 
  Legal matters in connection with the Contracts described in this
registration statement have been passed on by H. James Wilson, General Counsel
of the Company. Sutherland, Asbill & Brennan LLP, Washington, D.C., have acted
as special counsel on certain matters relating to the Federal securities laws.
 
                                     II-25
<PAGE>
 
                                   APPENDIX A
 
ABC and affiliates           Indianapolis Star        San Jose Mercury
Atlanta Constitution         Institutional Investor   Seattle Post-
Atlanta Journal              Investment Dealers       Intelligencer
Austin American              Digest                   Seattle Times
Statesman                    Investment Vision        Smart Money
Baltimore Sun                Investor's Daily         St. Louis Post Dispatch
Barron's                     Journal of Commerce      St. Petersburg Times
Bond Buyer                   Kansas City Star         Standard & Poor's
Boston Business Journal      LA Times                 Outlook
Boston Globe                 Leckey, Andrew           Standard & Poor's Stock
Boston Herald                (syndicated column)      Guide
Broker World                 Life Association News    Stanger's Investment
Business Radio Network       Miami Herald             Advisor
Business Week                Milwaukee Sentinel       Stockbroker's Register
CBS and affiliates           Money                    Strategic Insight
CFO                          Money Maker              Tampa Tribune
Changing Times               Money Management Letter  Time
Chicago Sun Times            Morningstar              Tobias, Andrew
Chicago Tribune              National Public Radio    (syndicated column)
Christian Science            National Underwriter     UPI
Monitor                      NBC and affiliates       US News and World Report
Christian Science            New England Business     USA Today
Monitor News Service         New England Cable News   Value Line
Cincinnati Enquirer          New Orleans Times-       Wall St. Journal
Cincinnati Post              Picayune                 Wall Street Letter
CNBC                         New York Daily News      Wall Street Week
CNN                          New York Times           Washington Post
Columbus Dispatch            Newark Star Ledger       WBZ
Dallas Morning News          Newsday                  WBZ-TV
Dallas Times-Herald          Newsweek                 WCVB-TV
Denver Post                  Nightly Business Report  WEEI
Des Moines Register          Orange County Register   WHDH
Detroit Free Press           Orlando Sentinel         Worcester Telegram
Donoghues Money Fund         Pension World            Worth Magazine
Report                       Pensions and Investments WRKO
Dorfman, Dan (syndicated     Personal Investor
column)                      Philadelphia Inquirer
Dow Jones News Service       Porter, Sylvia
Economist                    (syndicated column)
FACS of the Week             Portland Oregonian
Financial News Network       Public Broadcasting
Financial Planning           Service
Financial Services Week      Quinn, Jane Bryant
Financial World              (syndicated column)
Forbes                       Registered
Fort Worth Star-Telegram     Representative
Fortune                      Research Magazine
Fox Network and              Resource
affiliates                   Reuters
Fund Action                  Rukeyser's Business
Hartford Courant             (syndicated column)
Houston Chronicle            Sacramento Bee
INC                          San Francisco Chronicle
                             San Francisco Examiner
 
                                     II-26
<PAGE>
 
                 NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT
                                      OF
                      NEW ENGLAND LIFE INSURANCE COMPANY
 
                        REPORT OF INDEPENDENT AUDITORS
 
To the Contract Owners of  New England Life Insurance Company:
 
We have audited the accompanying statement of assets and liabilities of the
New England Variable Annuity Separate Account (comprised of Bond Income Sub-
Account, Money Market Sub-Account, Avanti Growth Sub-Account, Growth and
Income Sub-Account (formerly Value Growth Sub-Account), Small Cap Sub-Account,
U.S. Government Sub-Account, Balanced Sub-Account, Equity Growth Sub-Account,
International Equity Sub-Account, Venture Value Sub-Account and Bond
Opportunities Sub-Account) of New England Life Insurance Company (formerly New
England Variable Life Insurance Company) as of December 31, 1997, and the
related statements of operations and changes in net assets for the twelve
months ended December 31, 1997 and 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
 
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatements. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
 
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the respective aforementioned
sub-accounts comprising the New England Variable Annuity Separate Account of
New England Life Insurance Company as of December 31, 1997, and the results of
their operations and the changes in net assets for the twelve months ended
December 31, 1997 and 1996, in conformity with generally accepted accounting
principles.
 
DELOITTE & TOUCHE LLP

Boston, Massachusetts 
April 17, 1998
 
                                      F-1
<PAGE>
 
 
                 NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT
                                       OF
                       NEW ENGLAND LIFE INSURANCE COMPANY
 
                      STATEMENT OF ASSETS AND LIABILITIES
 
                               DECEMBER 31, 1997
 
<TABLE>
<CAPTION>
 <S>                 <C>        <C>
 ASSETS
 Investments in New England Zenith Fund, at
 value (Note 2)..............................
                       SHARES        COST
                     ---------- --------------
 Back Bay Advisors
 Bond Income
 Series...........      247,325 $   27,066,266
 Back Bay Advisors
 Money Market
 Series...........      179,741     17,974,088
 Loomis Sayles
 Avanti Growth
 Series...........      183,864     29,669,016
 Westpeak Growth
 and Income
 Series...........      252,320     41,645,334
 Loomis Sayles
 Small Cap Series.      326,968     48,736,032
 Salomon Brothers
 U.S. Government
 Series...........      954,895     10,606,355
 Loomis Sayles
 Balanced Series..    3,765,551     51,022,152
 Alger Equity
 Growth Series....    3,594,498     58,013,641
 Morgan Stanley
 International
 Magnum Equity
 Series...........    2,273,617     25,467,235
 Davis Venture
 Value Series.....    4,139,394     70,081,860
 Solomon Brothers
 Strategic Bond
 Opportunities
 Series...........    2,873,726     34,227,075
                                --------------
 Total............              $  414,509,054
                                ==============
 Amount due and accrued from 
 contract-related 
 transactions, net............
 Dividends receivable.........
         TOTAL ASSETS.........
 LIABILITIES
 Due to (from) New England 
 Life Insurance Company.......
 NET ASSETS
 Net Assets consist of:
 Net Assets attributable to 
 Variable Annuity
 Contracts....................
 Annuity Reserves (Note 7)....
         TOTAL NET ASSETS.....
<CAPTION>
                                -------------------------------------------------------------------------------------------------
                                   BOND         MONEY      AVANTI     GROWTH AND     SMALL       U.S.                   EQUITY   
                                  INCOME       MARKET      GROWTH       INCOME        CAP     GOVERNMENT   BALANCED     GROWTH   
                                SUB-ACCOUNT  SUB-ACCOUNT SUB-ACCOUNT  SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
                                ------------ ----------- -----------  ----------- ----------- ----------- ----------- -----------
 <S>                            <C>          <C>         <C>          <C>         <C>         <C>         <C>         <C>        
 ASSETS                                                                                                  
 Investments in New                                                                                      
 England Zenith Fund,                                                                                    
 at value                                                                                                
 (Note 2).........               $26,837,199  $17,974,088 $31,365,400  $45,409,964 $51,961,757 $10,627,983 $55,956,082  $63,335,055
 Back Bay Advisors                                                                                       
 Bond Income                                                                                             
 Series...........                                                                                       
 Back Bay Advisors                                                                                       
 Money Market                                                                                            
 Series...........                                                                                       
 Loomis Sayles                                                                                           
 Avanti Growth                                                                                           
 Series...........                                                                                       
 Westpeak Growth                                                                                         
 and Income                                                                                              
 Series...........                                                                                       
 Loomis Sayles                                                                                           
 Small Cap Series.                                                                                       
 Salomon Brothers                                                                                        
 U.S. Government                                                                                         
 Series...........                                                                                       
 Loomis Sayles                                                                                           
 Balanced Series..                                                                                       
 Alger Equity                                                                                            
 Growth Series....                                                                                       
 Morgan Stanley                                                                                          
 International                                                                                           
 Magnum Equity                                                                                           
 Series...........                                                                                       
 Davis Venture                                                                                           
 Value Series.....                                                                                       
 Solomon Brothers                                                                                        
 Strategic Bond                                                                                          
 Opportunities                                                                                           
 Series...........                                                                                       
 Total............                                                                                       
 Amount due and accrued from 
 contract-related 
 transactions, net............       131,882      141,693      91,737      154,813     208,618       4,971     316,322      152,279
 Dividends receivable.........            --       83,229          --           --         --           --          --           --
                                ------------  ----------- -----------  ----------- ----------- ----------- -----------  -----------
         TOTAL ASSETS.........    26,969,081   18,199,010  31,457,137   45,564,777  52,170,375  10,632,954  56,272,404   63,487,334
 LIABILITIES                                                                                                                      
 Due to (from) New England                                                                                                        
 Life Insurance Company.......        (8,486)      30,130     (16,967)    (118,819)     88,945       9,698      90,193       61,299
                                ------------  ----------- -----------  ----------- ----------- ----------- -----------  -----------
 NET ASSETS                      $26,977,567  $18,168,880 $31,474,104  $45,683,596 $52,081,430 $10,623,256 $56,182,211  $63,426,035
                                ============  =========== ===========  =========== =========== =========== ===========  ===========
 Net Assets consist of:                                                                                  
 Net Assets attributable to 
 Variable Annuity                                                             
 Contracts....................   $26,042,398  $17,910,620 $30,668,885  $42,482,915 $51,209,887 $10,369,656 $54,558,995 $62,648,691
 Annuity Reserves (Note 7)....       935,169      258,260     805,219    3,200,681     871,543     253,600   1,623,216     777,344  
                                ------------  ----------- -----------  ----------- ----------- ----------- ----------- ----------- 
         TOTAL NET ASSETS.....   $26,977,567  $18,168,880 $31,474,104  $45,683,596 $52,081,430 $10,623,256 $56,182,211 $63,426,035
                                ============  =========== ===========  =========== =========== =========== =========== ===========
<CAPTION> 
                                ----------------------------------------------------
                                INTERNATIONAL   VENTURE       BOND
                                   EQUITY        VALUE    OPPORTUNITIES
                                 SUB-ACCOUNT  SUB-ACCOUNT  SUB-ACCOUNT     TOTAL
                                ------------- ----------- ------------- ------------
 <S>                            <C>           <C>         <C>           <C>
 ASSETS                                                                                                  
 Investments in New                                                                                      
 England Zenith Fund,                                                                                    
 at value                                                                                                
 (Note 2).........               $24,691,485  $86,099,383  $34,513,448   $448,771,844
 Back Bay Advisors                                                                                       
 Bond Income                                                                                             
 Series...........                                                                                       
 Back Bay Advisors                                                                                       
 Money Market                                                                                            
 Series...........                                                                                       
 Loomis Sayles                                                                                           
 Avanti Growth                                                                                           
 Series...........                                                                                       
 Westpeak Growth                                                                                         
 and Income                                                                                              
 Series...........                                                                                       
 Loomis Sayles                                                                                           
 Small Cap Series.                                                                                       
 Salomon Brothers                                                                                        
 U.S. Government                                                                                         
 Series...........                                                                                       
 Loomis Sayles                                                                                           
 Balanced Series..                                                                                       
 Alger Equity                                                                                            
 Growth Series....                                                                                       
 Morgan Stanley                                                                                          
 International                                                                                           
 Magnum Equity                                                                                           
 Series...........                                                                                       
 Davis Venture                                                                                           
 Value Series.....                                                                                       
 Solomon Brothers                                                                                        
 Strategic Bond                                                                                          
 Opportunities                                                                                           
 Series...........                                                                                       
 Total............                                                                                       
 Amount due and accrued from 
 contract-related 
 transactions, net............        78,406      224,873       79,872      1,585,466
 Dividends receivable.........            --           --           --         83,229
                                 -----------  -----------  -----------   ------------ 
         TOTAL ASSETS.........    24,769,891   86,324,256   34,593,320    450,440,539
 LIABILITIES                                                                                             
 Due to (from) New England Life 
 Insurance Company............       (44,237)     223,486      (82,976)       232,266
                                 -----------  -----------  -----------   ------------ 
 NET ASSETS                      $24,814,128  $86,100,770  $34,676,296   $450,208,273
                                 ===========  ===========  ===========   ============ 
 Net Assets consist of:                                                                                  
 Net Assets attributable to 
 Variable Annuity                                                             
 Contracts....................   $24,261,165  $84,555,420  $33,384,179   $438,092,811
 Annuity Reserves (Note 7)....       552,963    1,545,350    1,292,117     12,115,462
                                 -----------  -----------  -----------   ------------ 
         TOTAL NET ASSETS.....   $24,814,128  $86,100,770  $34,676,296   $450,208,273
                                 ===========  ===========  ===========   ============ 
</TABLE>

 
                       See Notes to Financial Statements
 
                                      F-2

<PAGE>
 
                 NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT
                                      OF
                      NEW ENGLAND LIFE INSURANCE COMPANY
 
                            STATEMENT OF OPERATIONS
 
                 FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1997
 
<TABLE>
<CAPTION>
                    ----------------------------------------------------------------------------------------------------
                       BOND      MONEY     AVANTI   GROWTH AND   SMALL       U.S.                 EQUITY   INTERNATIONAL
                      INCOME     MARKET    GROWTH     INCOME      CAP     GOVERNMENT  BALANCED    GROWTH      EQUITY
                       SUB-       SUB-      SUB-       SUB-       SUB-       SUB-       SUB-       SUB-        SUB-
                     ACCOUNT    ACCOUNT   ACCOUNT    ACCOUNT    ACCOUNT    ACCOUNT    ACCOUNT    ACCOUNT      ACCOUNT
                    ----------  -------- ---------- ---------- ---------- ---------- ---------- ---------- -------------
<S>                 <C>         <C>      <C>        <C>        <C>        <C>        <C>        <C>        <C>
INCOME
 Dividends........  $1,945,217  $976,275 $2,407,620 $4,798,541 $5,930,573  $550,466  $3,047,021 $6,117,169  $   621,097
EXPENSES
 Mortality,
 expense risk and
 administrative
 charges
 (Note 3).........     273,001   256,711    338,700    426,698    501,429   110,575     571,695    661,841      278,858
                    ----------  -------- ---------- ---------- ----------  --------  ---------- ----------  -----------
 Net investment
 income...........   1,672,216   719,564  2,068,920  4,371,843  5,429,144   439,891   2,475,326  5,455,328      342,239
NET REALIZED AND
UNREALIZED GAIN
(LOSS) ON
INVESTMENTS
 Net unrealized
 appreciation
 (depreciation) on
 investments:
  Beginning of
  year............    (388,420)       --    365,848    534,754  1,485,276   (92,485)  1,957,461  2,073,762      368,493
  End of year.....    (229,067)       --  1,696,384  3,764,630  3,225,725    21,628   4,933,930  5,321,414     (775,750)
                    ----------  -------- ---------- ---------- ----------  --------  ---------- ----------  -----------
 Net change in
 unrealized
 appreciation
 (depreciation)...     159,353        --  1,330,536  3,229,876  1,740,449   114,113   2,976,469  3,247,652   (1,144,243)
 Net realized gain
 (loss) on
 investments......         234        --      2,229      1,645        567        85         700        465          117
                    ----------  -------- ---------- ---------- ----------  --------  ---------- ----------  -----------
 Net realized and
 unrealized gain
 (loss) on
 investments......     159,587        --  1,332,765  3,231,521  1,741,016   114,198   2,977,169  3,248,117   (1,144,126)
                    ----------  -------- ---------- ---------- ----------  --------  ---------- ----------  -----------
NET INCREASE
(DECREASE) IN NET
ASSETS RESULTING
FROM OPERATIONS...  $1,831,803  $719,564 $3,401,685 $7,603,364 $7,170,160  $554,089  $5,452,495 $8,703,445  $  (801,887)
                    ==========  ======== ========== ========== ==========  ========  ========== ==========  ===========
<CAPTION>
                                     BOND
                      VENTURE    OPPORTUNITIES
                       VALUE         SUB-
                    SUB-ACCOUNT     ACCOUNT       TOTAL
                    ------------ ------------- -----------
<S>                 <C>          <C>           <C>
INCOME
 Dividends........  $ 2,640,935   $2,382,489   $31,417,403
EXPENSES
 Mortality,
 expense risk and
 administrative
 charges
 (Note 3).........      816,066      347,454     4,583,028
                    ------------ ------------- -----------
 Net investment
 income...........    1,824,869    2,035,035    26,834,375
NET REALIZED AND
UNREALIZED GAIN
(LOSS) ON
INVESTMENTS
 Net unrealized
 appreciation
 (depreciation) on
 investments:
  Beginning of
  year............    3,645,390       45,311     9,995,390
  End of year.....   16,017,523      286,373    34,262,790
                    ------------ ------------- -----------
 Net change in
 unrealized
 appreciation
 (depreciation)...   12,372,133      241,062    24,267,400
 Net realized gain
 (loss) on
 investments......          (34)         (71)        5,937
                    ------------ ------------- -----------
 Net realized and
 unrealized gain
 (loss) on
 investments......   12,372,099      240,991    24,273,337
                    ------------ ------------- -----------
NET INCREASE
(DECREASE) IN NET
ASSETS RESULTING
FROM OPERATIONS...  $14,196,968   $2,276,026   $51,107,712
                    ============ ============= ===========
</TABLE>
 
                       See Notes to Financial Statements
 
                                      F-3
<PAGE>
 
                 NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT
                                      OF
                      NEW ENGLAND LIFE INSURANCE COMPANY
 
                            STATEMENT OF OPERATIONS
 
                 FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1996
 
<TABLE>
<CAPTION>
                    -----------------------------------------------------------------------------------------------------
                      BOND      MONEY     AVANTI    GROWTH AND   SMALL       U.S.                 EQUITY
                     INCOME     MARKET    GROWTH      INCOME      CAP     GOVERNMENT  BALANCED    GROWTH    INTERNATIONAL
                      SUB-       SUB-      SUB-        SUB-       SUB-       SUB-       SUB-       SUB-        EQUITY
                     ACCOUNT   ACCOUNT   ACCOUNT     ACCOUNT    ACCOUNT    ACCOUNT    ACCOUNT    ACCOUNT     SUB-ACCOUNT
                    ---------  -------- ----------  ---------- ---------- ---------- ---------- ----------  -------------
<S>                 <C>        <C>      <C>         <C>        <C>        <C>        <C>        <C>         <C>
INCOME
 Dividends........  $ 996,618  $584,576 $  796,869  $1,486,194 $1,236,100  $314,575  $  690,227 $   49,135    $217,097
EXPENSES
 Mortality,
 expense risk and
 administrative
 charges
 (Note 3).........    117,696   139,034    106,974     128,321    124,297    55,834     173,854    213,057     111,065
                    ---------  -------- ----------  ---------- ----------  --------  ---------- ----------    --------
 Net investment
 income (loss)....    878,922   445,542    689,895   1,357,873  1,111,803   258,741     516,373   (163,922)    106,032
NET REALIZED AND
UNREALIZED GAIN
(LOSS) ON
INVESTMENTS
 Net unrealized
 appreciation
 (depreciation) on
 investments:
  Beginning of
  year............    (56,238)       --    (20,804)     83,206     92,761     6,856      85,201     20,459      64,159
  End of year.....   (388,420)       --    365,848     534,754  1,485,276   (92,485)  1,957,461  2,073,762     368,493
                    ---------  -------- ----------  ---------- ----------  --------  ---------- ----------    --------
 Net change in
 unrealized
 appreciation
 (depreciation)...   (332,182)       --    386,652     451,548  1,392,515   (99,341)  1,872,260  2,053,303     304,334
 Net realized gain
 (loss) on
 investments......        (73)       --         56         172        202     1,012          72       (131)        804
                    ---------  -------- ----------  ---------- ----------  --------  ---------- ----------    --------
 Net realized and
 unrealized gain
 (loss) on
 investments......   (332,255)       --    386,708     451,720  1,392,717   (98,329)  1,872,332  2,053,172     305,138
                    ---------  -------- ----------  ---------- ----------  --------  ---------- ----------    --------
NET INCREASE IN
NET ASSETS
RESULTING FROM
OPERATIONS........  $ 546,667  $445,542 $1,076,603  $1,809,593 $2,504,520  $160,412  $2,388,705 $1,889,250    $411,170
                    =========  ======== ==========  ========== ==========  ========  ========== ==========    ========
<CAPTION>
                     VENTURE
                      VALUE        BOND
                       SUB-    OPPORTUNITIES
                     ACCOUNT    SUB-ACCOUNT     TOTAL
                    ---------- ------------- -----------
<S>                 <C>        <C>           <C>
INCOME
 Dividends........  $  679,955   $891,674    $ 7,943,020
EXPENSES
 Mortality,
 expense risk and
 administrative
 charges
 (Note 3).........     204,628     92,995      1,467,755
                    ---------- ------------- -----------
 Net investment
 income (loss)....     475,327    798,679      6,475,265
NET REALIZED AND
UNREALIZED GAIN
(LOSS) ON
INVESTMENTS
 Net unrealized
 appreciation
 (depreciation) on
 investments:
  Beginning of
  year............     179,424    (56,229)       398,795
  End of year.....   3,645,390     45,311      9,995,390
                    ---------- ------------- -----------
 Net change in
 unrealized
 appreciation
 (depreciation)...   3,465,966    101,540      9,596,595
 Net realized gain
 (loss) on
 investments......         440        705          3,259
                    ---------- ------------- -----------
 Net realized and
 unrealized gain
 (loss) on
 investments......   3,466,406    102,245      9,599,854
                    ---------- ------------- -----------
NET INCREASE IN
NET ASSETS
RESULTING FROM
OPERATIONS........  $3,941,733   $900,924    $16,075,119
                    ========== ============= ===========
</TABLE>
 
                       See Notes to Financial Statements
 
                                      F-4
<PAGE>
 
                 NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT
                                      OF
                      NEW ENGLAND LIFE INSURANCE COMPANY
 
                      STATEMENT OF CHANGES IN NET ASSETS
 
                 FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1997
 
<TABLE>
<CAPTION>
                   -------------------------------------------------------------------------------------------------------
                      BOND         MONEY       AVANTI     GROWTH AND      SMALL        U.S.                     EQUITY
                     INCOME       MARKET       GROWTH       INCOME         CAP      GOVERNMENT    BALANCED      GROWTH
                   SUB-ACCOUNT  SUB-ACCOUNT  SUB-ACCOUNT  SUB-ACCOUNT  SUB-ACCOUNT  SUB-ACCOUNT  SUB-ACCOUNT  SUB-ACCOUNT
                   -----------  -----------  -----------  -----------  -----------  -----------  -----------  -----------
<S>                <C>          <C>          <C>          <C>          <C>          <C>          <C>          <C>
FROM OPERATING
ACTIVITIES
 Net investment
 income..........  $ 1,672,216  $   719,564  $ 2,068,920  $ 4,371,843  $ 5,429,144  $   439,891  $ 2,475,326  $ 5,455,328
 Net realized and
 unrealized gain
 (loss) on
 investments.....      159,587           --    1,332,765    3,231,521    1,741,016      114,198    2,977,169    3,248,117
                   -----------  -----------  -----------  -----------  -----------  -----------  -----------  -----------
 Net increase
 (decrease) in
 net assets
 resulting from
 operations......    1,831,803      719,564    3,401,685    7,603,364    7,170,160      554,089    5,452,495    8,703,445
FROM CONTRACT-
RELATED
TRANSACTIONS
 Purchase
 payments
 transferred from
 New England Life
 Insurance
 Company.........   11,236,642   33,271,900   12,535,013   20,020,290   21,326,402    3,841,692   26,180,743   23,395,987
 Net transfers
 (to) from other
 sub-accounts....      936,254  (32,091,801)   1,384,330    4,744,804    6,042,290      259,045    2,443,590    4,307,055
 Net transfers to
 New England Life
 Insurance
 Company.........   (1,406,131)  (1,866,995)  (1,008,921)  (3,176,042)  (1,565,170)    (430,245)  (2,461,194)  (2,018,944)
                   -----------  -----------  -----------  -----------  -----------  -----------  -----------  -----------
 Net Increase
 (decrease) in
 net assets
 resulting from
 contract-related
 transactions....   10,766,765     (686,896)  12,910,422   21,589,052   25,803,522    3,670,492   26,163,139   25,684,098
                   -----------  -----------  -----------  -----------  -----------  -----------  -----------  -----------
NET INCREASE IN
NET ASSETS.......   12,598,568       32,668   16,312,107   29,192,416   32,973,682    4,224,581   31,615,634   34,387,543
NET ASSETS, AT
BEGINNING OF THE
YEAR.............   14,378,999   18,136,212   15,161,997   16,491,180   19,107,748    6,398,675   24,566,577   29,038,492
                   -----------  -----------  -----------  -----------  -----------  -----------  -----------  -----------
NET ASSETS, AT
END OF THE YEAR..  $26,977,567  $18,168,880  $31,474,104  $45,683,596  $52,081,430  $10,623,256  $56,182,211  $63,426,035
                   ===========  ===========  ===========  ===========  ===========  ===========  ===========  ===========
<CAPTION>
                   INTERNATIONAL   VENTURE        BOND
                      EQUITY        VALUE     OPPORTUNITIES
                    SUB-ACCOUNT  SUB-ACCOUNT   SUB-ACCOUNT     TOTAL
                   ------------- ------------ ------------- -------------
<S>                <C>           <C>          <C>           <C>
FROM OPERATING
ACTIVITIES
 Net investment
 income..........   $   342,239  $ 1,824,869   $ 2,035,035  $ 26,834,375
 Net realized and
 unrealized gain
 (loss) on
 investments.....    (1,144,126)  12,372,099       240,991    24,273,337
                   ------------- ------------ ------------- -------------
 Net increase
 (decrease) in
 net assets
 resulting from
 operations......      (801,887)  14,196,968     2,276,026    51,107,712
FROM CONTRACT-
RELATED
TRANSACTIONS
 Purchase
 payments
 transferred from
 New England Life
 Insurance
 Company.........    11,037,821   36,720,286    17,465,416   217,032,192
 Net transfers
 (to) from other
 sub-accounts....       938,157    8,959,499     2,076,777            --
 Net transfers to
 New England Life
 Insurance
 Company.........      (923,740)  (2,986,228)   (1,713,411)  (19,557,021)
                   ------------- ------------ ------------- -------------
 Net Increase
 (decrease) in
 net assets
 resulting from
 contract-related
 transactions....    11,052,238   42,693,557    17,828,782   197,475,171
                   ------------- ------------ ------------- -------------
NET INCREASE IN
NET ASSETS.......    10,250,351   56,890,525    20,104,808   248,582,883
NET ASSETS, AT
BEGINNING OF THE
YEAR.............    14,563,777   29,210,245    14,571,488   201,625,390
                   ------------- ------------ ------------- -------------
NET ASSETS, AT
END OF THE YEAR..   $24,814,128  $86,100,770   $34,676,296  $450,208,273
                   ============= ============ ============= =============
</TABLE>
 
                       See Notes to Financial Statements

 

                                      F-5

<PAGE>
 
                 NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT
                                      OF
                      NEW ENGLAND LIFE INSURANCE COMPANY
 
                      STATEMENT OF CHANGES IN NET ASSETS
 
                 FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1996
 
<TABLE>
<CAPTION>
                   ------------------------------------------------------------------------------------------------------
                                                                                       U.S.
                      BOND         MONEY       AVANTI     GROWTH AND      SMALL     GOVERNMENT                 EQUITY
                     INCOME       MARKET       GROWTH       INCOME         CAP         SUB-      BALANCED      GROWTH
                   SUB-ACCOUNT  SUB-ACCOUNT  SUB-ACCOUNT  SUB-ACCOUNT  SUB-ACCOUNT   ACCOUNT    SUB-ACCOUNT  SUB-ACCOUNT
                   -----------  -----------  -----------  -----------  -----------  ----------  -----------  -----------
<S>                <C>          <C>          <C>          <C>          <C>          <C>         <C>          <C>
FROM OPERATING
ACTIVITIES
Net investment
income (loss)....  $   878,922  $   445,542  $   689,895  $ 1,357,873  $ 1,111,803  $  258,741  $   516,373    ($163,922)
 Net realized and
 unrealized gain
 (loss) on
 investments.....     (332,255)          --      386,708      451,720    1,392,717     (98,329)   1,872,332    2,053,172
                   -----------  -----------  -----------  -----------  -----------  ----------  -----------  -----------
 Net increase in
 net assets
 resulting from
 operations......      546,667      445,542    1,076,603    1,809,593    2,504,520     160,412    2,388,705    1,889,250
FROM CONTRACT-
RELATED
TRANSACTIONS
Purchase payments
transferred from
New England Life
Insurance
Company..........   10,068,726   30,165,177   10,017,554    9,961,049   12,313,114   4,228,387   16,027,105   19,491,589
Net transfers
(to) from other
sub-accounts.....      308,694  (16,711,897)   1,607,239    1,390,946    1,878,952      62,147    2,053,141    2,962,775
Net transfers
(to) from New
England Life
Insurance
Company..........     (489,973)    (975,438)    (430,695)    (957,156)    (547,400)   (469,227)    (623,930)    (789,579)
                   -----------  -----------  -----------  -----------  -----------  ----------  -----------  -----------
 Net increase in
 net assets
 resulting from
 contract-related
 transactions....    9,887,447   12,477,842   11,194,098   10,394,839   13,644,666   3,821,307   17,456,316   21,664,785
                   -----------  -----------  -----------  -----------  -----------  ----------  -----------  -----------
NET INCREASE IN
NET ASSETS.......   10,434,114   12,923,384   12,270,701   12,204,432   16,149,186   3,981,719   19,845,021   23,554,035
NET ASSETS, AT
BEGINNING OF THE
YEAR.............    3,944,885    5,212,828    2,891,296    4,286,748    2,958,562   2,416,956    4,721,556    5,484,457
                   -----------  -----------  -----------  -----------  -----------  ----------  -----------  -----------
NET ASSETS, AT
END OF THE YEAR..  $14,378,999  $18,136,212  $15,161,997  $16,491,180  $19,107,748  $6,398,675  $24,566,577  $29,038,492
                   ===========  ===========  ===========  ===========  ===========  ==========  ===========  ===========
<CAPTION>
                   INTERNATIONAL   VENTURE        BOND
                      EQUITY        VALUE     OPPORTUNITIES
                    SUB-ACCOUNT  SUB-ACCOUNT   SUB-ACCOUNT     TOTAL
                   ------------- ------------ ------------- -------------
<S>                <C>           <C>          <C>           <C>
FROM OPERATING
ACTIVITIES
Net investment
income (loss)....   $   106,032  $   475,327   $   798,679  $  6,475,265
 Net realized and
 unrealized gain
 (loss) on
 investments.....       305,138    3,466,406       102,245     9,599,854
                   ------------- ------------ ------------- -------------
 Net increase in
 net assets
 resulting from
 operations......       411,170    3,941,733       900,924    16,075,119
FROM CONTRACT-
RELATED
TRANSACTIONS
Purchase payments
transferred from
New England Life
Insurance
Company..........     9,804,736   18,465,880    10,298,058   150,841,375
Net transfers
(to) from other
sub-accounts.....     1,727,240    2,832,686     1,888,077            --
Net transfers
(to) from New
England Life
Insurance
Company..........      (569,779)  (1,055,952)     (804,697)   (7,713,826)
                   ------------- ------------ ------------- -------------
 Net increase in
 net assets
 resulting from
 contract-related
 transactions....    10,962,197   20,242,614    11,381,438   143,127,549
                   ------------- ------------ ------------- -------------
NET INCREASE IN
NET ASSETS.......    11,373,367   24,184,347    12,282,362   159,202,668
NET ASSETS, AT
BEGINNING OF THE
YEAR.............     3,190,410    5,025,898     2,289,126    42,422,722
                   ------------- ------------ ------------- -------------
NET ASSETS, AT
END OF THE YEAR..   $14,563,777  $29,210,245   $14,571,488  $201,625,390
                   ============= ============ ============= =============
</TABLE>
 
                       See Notes to Financial Statements
 
                                      F-6
<PAGE>
 
                 NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT
                                      OF
                      NEW ENGLAND LIFE INSURANCE COMPANY
 
                         NOTES TO FINANCIAL STATEMENTS
 
1. NATURE OF BUSINESS. New England Variable Annuity Separate Account (the
"Account") of New England Life Insurance Company ("NELICO"), formerly New
England Variable Life Insurance Company ("NEVLICO"), was established by
NELICO's Board of Directors on July 1, 1994 in accordance with the regulations
of the Delaware Insurance Department and is now operating in accordance with
the regulations of the Commonwealth of Massachusetts Division of Insurance.
The Account is registered as a unit investment trust under the Investment
Company Act of 1940. The assets of the Account are owned by NELICO. The net
assets of the Account are restricted from use in the ordinary business of
NELICO.
 
Effective with the merger on August 30, 1996 of New England Mutual Life
Insurance Company ("NEMLICO") and Metropolitan Life Insurance Company ("MLI"),
NEMLICO ceased to exist, with MLI the surviving company of the merger. NELICO
then became an indirect wholly-owned subsidiary of MLI.
 
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
 
2. SUB-ACCOUNTS. The Account has eleven investment sub-accounts each of which
invests in the shares of one portfolio of the New England Zenith Fund ("Zenith
Fund"). The portfolios of the Zenith Fund in which the sub-accounts invest are
referred to herein as the "Eligible Funds". The Zenith Fund is a diversified,
open-end management investment company. The Account purchases or redeems
shares of the eleven Eligible Funds based on the amount of purchase payments
invested in the Account, transfers among the sub-accounts, surrender payments,
annuity payments and death benefit payments. The values of the shares of the
Eligible Funds are determined as of the close of the New York Stock Exchange
(normally 4:00 p.m. EST) on each day the Exchange is open for trading.
Realized gains and losses on the sale of Eligible Funds' shares are computed
on the basis of identified cost on the trade date. Income from dividends is
recorded on the ex-dividend date. Charges for investment advisory fees and
other expenses are reflected in the carrying value of the assets of the
Eligible Funds.
 
3. MORTALITY AND EXPENSE RISKS AND ADMINISTRATION CHARGES. Although variable
annuity payments differ according to the investment performance of the
Eligible Funds, they are not affected by mortality or expense experience
because NELICO assumes the mortality and expense risks under the contracts.
The mortality risk assumed by NELICO has two elements, a life annuity
mortality risk and, for deferred annuity contracts, a minimum death refund
risk. The life annuity mortality risk results from a provision in the contract
in which NELICO agrees to make annuity payments regardless of how long a
particular annuitant or other payee lives and how long all annuitants or other
payees as a class live if payment options involving life contingencies are
chosen. Those annuity payments are determined in accordance with annuity
purchase rate provisions established at the time that contracts are issued.
Under deferred annuity contracts, NELICO also assumes a minimum death refund
risk by providing that there will be payable, on the death of the annuitant
during the accumulation period, an amount equal to the greater of (1) a
guaranteed amount equal to the aggregate purchase payments made, without
interest, reduced by any partial surrender, and (2) the value of the contract
as of the death valuation date. The guaranteed amount in (1) above is
recalculated at the specific contract anniversaries to determine whether a
higher (but never a lower) guarantee will apply, based on the contract value
at the time of recalculation. Death proceeds are reduced by any outstanding
contract loan and, in certain states, by a premium tax charge. The expense
risk assumed by NELICO is the risk that the deductions for sales and
administrative expenses provided for in the variable annuity contract may
prove to be insufficient to cover the cost of those items.
 
                                      F-7
<PAGE>
 
                 NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT
                                      OF
                      NEW ENGLAND LIFE INSURANCE COMPANY
 
                   NOTES TO FINANCIAL STATEMENTS--CONTINUED
 
NELICO charges the Account for the mortality and expense risk NELICO assumes.
Currently, the charges are made daily at an annual rate of 1.25% of the
Account assets attributable to the American Growth Series individual variable
annuity contracts, and 1.00% of the Account assets attributable to the
American Forerunner Series individual variable annuity contracts. NELICO also
imposes an administration asset charge at an annual rate of .10% of the
Account assets attributable to American Growth Series and an annual
administration contract charge of $30 (not to exceed 2% of the total contract
value) per contract against contract value in the Account for both the
American Growth Series and American Forerunner Series, but this charge is
waived for any contract year in which the contract value reaches certain
amounts. A premium tax charge applies to the contracts in certain states.
 
4. FEDERAL INCOME TAXES. For federal income tax purposes the Account's
operations are included with those of NELICO. NELICO intends to make
appropriate charges against the Account in the future if and when tax
liabilities arise.
 
5. INVESTMENT ADVISERS. The adviser and sub-adviser for each series of the
Zenith Fund are listed in the chart below. TNE Advisers, Inc. which is a
subsidiary of NELICO, and each of the sub-advisers are registered with the SEC
as investment advisers under the Investment Advisers Act of 1940.
 
<TABLE>
<CAPTION>
        SERIES                ADVISER                    SUB-ADVISER
        ------           ------------------ -------------------------------------
<S>                      <C>                <C>
Back Bay Advisors Bond
 Income                  TNE Advisers, Inc. Back Bay Advisors, L.P.*
Back Bay Advisors Money
 Market                  TNE Advisers, Inc. Back Bay Advisors, L.P.*
Westpeak Growth and
 Income                  TNE Advisers, Inc. Westpeak Investment Advisors, L.P.*
Loomis Sayles Avanti
 Growth                  TNE Advisers, Inc. Loomis, Sayles & Company, L.P.*
Loomis Sayles Small Cap  TNE Advisers, Inc. Loomis, Sayles & Company, L.P.*
Loomis Sayles Balanced   TNE Advisers, Inc. Loomis, Sayles & Company, L.P.*
Morgan Stanley           TNE Advisers, Inc. Morgan Stanley Asset Management Inc.
 International Magnum
 Equity Series
Davis Venture Value      TNE Advisers, Inc. Davis Selected Advisers, L.P.(a)
Alger Equity Growth      TNE Advisers, Inc. Fred Alger Management, Inc.
Salomon Brothers U.S.
 Government              TNE Advisers, Inc. Salomon Brothers Asset Management Inc
Salomon Brothers         TNE Advisers, Inc. Salomon Brothers Asset Management Inc(b)
 Strategic Bond
 Opportunities
</TABLE>
- --------
*  An affiliate of NELICO

(a) Davis Selected Advisers, L.P. may also delegate any of its
    responsibilities to Davis Selected Advisers-NY, Inc. a wholly-owned
    subsidiary of Davis Selected Advisers, L.P.
(b) In connection with Solomon Brothers Asset Management Inc's service as
    subadviser to the Strategic Bond Opportunities Series, Solomon Brothers
    Asset Management Inc's London based affiliate, Solomon Brothers Asset
    Management Limited provides certain subadvisory services to Solomon
    Brothers Asset Management Inc.
 
Effective May 1, 1997 the Draycott International Equity Series was renamed the
Morgan Stanley International Magnum Equity Series and a new Sub-Advisory
agreement between TNE Advisers, Inc. and Morgan Stanley Asset Management Inc.
went into effect replacing the prior agreement between TNE Advisers, Inc. and
Draycott Partners Ltd.
 
                                      F-8
<PAGE>
 
                 NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT
                                      OF
                      NEW ENGLAND LIFE INSURANCE COMPANY
 
                   NOTES TO FINANCIAL STATEMENTS--CONTINUED
 
On January 28, 1998 the Zenith Fund's Board of Trustees approved new advisory
and subadvisory agreements (the "New Agreements") relating to the Loomis
Sayles Avanti Growth Series between TNE Advisers, Inc. and the Zenith Fund on
behalf of the Series, and between TNE Advisers, Inc. and Goldman Sachs Asset
Management ("Goldman Sachs"), respectively. The New Agreements, which are
subject to shareholder approval, are expected to become effective on or about
May 1, 1998. Under the New Agreements, Goldman Sachs would become the
subadvisor of the Series, succeeding Loomis Sayles & Company, L.P., and would
become responsible for the day-to-day management of the Series' investment
operations under the oversight of TNE Advisers, Inc. Accordingly, the name of
the Series would be changed to the "Goldman Sachs Midcap Value Series" at the
time the New Agreements take effect. Goldman Sachs is a separate operating
division of Goldman, Sachs & Co., a privately-owned global financial services
company.
 
6. INVESTMENT PURCHASES AND SALES. The following table shows the aggregate
cost of Eligible Fund shares purchased and proceeds from the sales of Eligible
Fund shares for each sub-account for the year ended December 31, 1997:
 
<TABLE>
<CAPTION>
                                                         PURCHASES     SALES
                                                        ----------- -----------
     <S>                                                <C>         <C>
     Back Bay Advisors Bond Income Series               $16,841,907 $ 4,349,249
     Back Bay Advisors Money Market Series               48,685,335  48,970,324
     Westpeak Growth and Income Series                   33,233,707   7,534,134
     Loomis Sayles Avanti Growth Series                  20,301,291   5,362,826
     Loomis Sayles Small Cap Series                      37,778,826   6,600,835
     Loomis Sayles Balanced Series                       37,134,670   8,695,188
     Morgan Stanley International Magnum Equity Series   17,187,373   5,848,475
     Davis Venture Value Series                          55,094,472  10,493,506
     Alger Equity Growth Series                          39,728,632   8,594,154
     Salomon Brothers U.S. Government Series              6,432,752   2,290,291
     Salomon Brothers Strategic Bond Opportunities
      Series                                             26,804,707   7,095,236
</TABLE>
 
7. ANNUITY RESERVES. Annuity reserves are computed for currently payable
contracts according to the 1983-a Mortality Tables. The assumed interest rate
may be 0%, 3.5% or 5% as elected by the annuitant and as regulated by the laws
of the respective states. Adjustments to annuity reserves are reimbursed to or
from NELICO. For contracts payable on or after January 1, 1998 annuity
reserves will be computed according to the Annuity 2000 Mortality Tables.
 
                                      F-9
<PAGE>
 
                 NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT
                                      OF
                      NEW ENGLAND LIFE INSURANCE COMPANY
 
                   NOTES TO FINANCIAL STATEMENTS--CONTINUED
 
8. INCREASE (DECREASES) IN ACCUMULATION UNITS. A summary of units outstanding
for variable annuity contracts for the year ended December 31, 1997:
 
<TABLE>
<CAPTION>
                              BOND            MONEY          AVANTI        GROWTH AND         SMALL           U.S.
                             INCOME          MARKET          GROWTH          INCOME            CAP         GOVERNMENT
                           SUB-ACCOUNT     SUB-ACCOUNT     SUB-ACCOUNT     SUB-ACCOUNT     SUB-ACCOUNT    SUB-ACCOUNT
                         --------------- --------------- --------------- --------------- --------------- --------------
<S>                      <C>             <C>             <C>             <C>             <C>             <C>
Units Outstanding
12/31/96................  4,587,906.5882  9,257,297.7125  9,082,531.9506  9,527,396.1743 12,156,548.3743 5,511,551.9895
Units Purchased.........  3,916,068.5631 14,956,260.5578  8,525,396.2900 11,653,129.7279 16,140,136.9031 3,969,281.2671
Units Redeemed..........    636,015.0558 15,289,943.9985  1,319,345.0539  1,137,962.5425  1,397,023.7503   930,233.5378
                         --------------- --------------- --------------- --------------- --------------- --------------
Units Outstanding
12/31/97................  7,867,960.0955  8,923,614.2718 16,288,583.1867 20,042,563.3597 26,899,661.5271 8,550,599.7188
                         =============== =============== =============== =============== =============== ==============
Unit Value 12/31/97.....        3.428788        2.036045        1.932280        2.279329        1.936137       1.242399
                         =============== =============== =============== =============== =============== ==============
<CAPTION>
                                             EQUITY       INTERNATIONAL      VENTURE          BOND
                            BALANCED         GROWTH          EQUITY           VALUE       OPPORTUNITIES
                           SUB-ACCOUNT     SUB-ACCOUNT     SUB-ACCOUNT     SUB-ACCOUNT     SUB-ACCOUNT
                         --------------- --------------- --------------- --------------- ---------------
<S>                      <C>             <C>             <C>             <C>             <C>             
Units Outstanding
12/31/96................ 17,355,626.7971 18,546,947.2516 12,897,988.9760 17,782,791.6006 11,146,314.4768
Units Purchased......... 19,437,082.4699 15,656,144.5554 11,248,885.8471 23,868,861.2391 14,867,651.3746
Units Redeemed..........  2,164,765.8566  1,518,980.2309  1,579,036.1913  1,853,990.5224  1,808,834.3458
                         --------------- --------------- --------------- --------------- ---------------
Units Outstanding
12/31/97................ 34,627,943.4104 32,684,111.5761 22,567,838.6318 39,797,662.3173 24,205,131.5056
                         =============== =============== =============== =============== ===============
Unit Value 12/31/97.....        1.622453        1.940577        1.099535        2.163463        1.432601
                         =============== =============== =============== =============== ===============
</TABLE>
 
                                      F-10
<PAGE>
 
     
NEW ENGLAND LIFE INSURANCE COMPANY
 
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
 
We have audited the accompanying consolidated balance sheets of New England
Life Insurance Company (formerly New England Variable Life Insurance Company)
and subsidiaries as of December 31, 1997 and 1996, and the related
consolidated statements of earnings, equity, and cash flows for the years then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
 
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
 
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the New England Life Insurance
Company and subsidiaries as of December 31, 1997 and 1996, and the results of
their operations and their cash flows for the years then ended in conformity
with generally accepted accounting principles.
 
In 1996, as discussed in Note 1 to the financial statements, the Company (1)
adopted all applicable generally accepted accounting principles as required
for mutual life insurance enterprises (or wholly-owned stock life insurance
company subsidiaries of mutual life insurance enterprises) by Interpretation
No. 40, Applicability of Generally Accepted Accounting Principles to Mutual
Life Insurance and Other Enterprises, and Statement of Financial Accounting
Standards No. 120, Accounting and Reporting by Mutual Life Insurance
Enterprises and by Insurance Enterprises for Certain Long Duration
Participating Policies; and (2) reflected the effects of the changes in
corporate organizations.
 
The consolidated statements of earnings, equity, and cash flows for the period
ended December 31, 1995 present the combination of the individual financial
statements of New England Variable Life Insurance Company and other entities
listed in Note 1. Such individual financial statements were audited by other
auditors before the applicable effects of the changes described in the
paragraph above and their reports on the financial statements of each of the
insurance entities listed in Note 1 expressed an adverse opinion as to the
conformity with generally accepted accounting principles and an unqualified
opinion as to conformity with statutory principles and their reports on the
financial statements of each of the other entities expressed an unqualified
opinion. We have audited the adjustments that were applied to restate the 1995
financial statements to reflect the effects of the changes for the adoption of
generally accepted accounting principles and the changes in corporate
organization as described in Note 1. In our opinion, such adjustments are
appropriate and have been properly applied.
 
DELOITTE & TOUCHE LLP
 
February 17, 1998
Boston, Massachusetts
     
 
                                      N-1
<PAGE>
 
     
NEW ENGLAND LIFE INSURANCE COMPANY
 
- --------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------
 
DECEMBER 31, 1997 AND 1996 (DOLLARS IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                     NOTES    1997       1996
                                                     ----- ---------- ----------
<S>                                                  <C>   <C>        <C>
ASSETS
Investments:
 Fixed Maturities:
  Available for Sale, at Estimated Fair Value......  2,11  $  734,391 $  524,285
  Held to Maturity, at Amortized Cost..............    2           --     29,666
 Equity Securities.................................  2,11       9,399         --
 Policy Loans......................................   11      104,783     76,263
 Real Estate.......................................             2,757      1,702
 Short-Term Investments............................   11       27,944    156,560
 Other Invested Assets.............................            24,349     12,956
                                                           ---------- ----------
    Total Investments..............................           903,623    801,432
Cash and Cash Equivalents..........................   11       74,148     49,147
Deferred Policy Acquisition Costs..................           565,769    434,637
Accrued Investment Income..........................            18,712     13,713
Premiums and Other Receivables.....................    4       63,036      5,941
Other Assets.......................................            62,326     95,106
Separate Account Assets............................         1,988,225  1,206,959
                                                           ---------- ----------
    TOTAL ASSETS...................................        $3,675,839 $2,606,935
                                                           ========== ==========
LIABILITIES AND EQUITY
LIABILITIES
Future Policy Benefits.............................    4   $  500,429 $  464,889
Policyholder Account Balances......................  4,11     240,411    181,594
Other Policyholder Funds...........................   11        8,380      2,071
Policyholder Dividends Payable.....................            14,719      9,018
Short and Long-Term Debt...........................  8,11      85,981     84,057
Income Taxes Payable:                                  5
 Current...........................................             9,102      6,272
 Deferred..........................................            42,066     39,463
Due to Parent......................................           107,337     40,225
Other Liabilities..................................            45,647     21,965
Separate Account Liabilities.......................         1,988,225  1,206,959
                                                           ---------- ----------
    TOTAL LIABILITIES..............................         3,042,297  2,056,513
                                                           ---------- ----------
Commitments and Contingencies (Notes 2, 4, 8 and 9)
EQUITY
Common Stock, $125.00 par value; 50,000 shares
 authorized, 20,000 shares issued and outstanding..             2,500      2,500
Contributed Capital................................           545,477    497,946
Retained Earnings..................................            68,218     46,249
Net Unrealized Investment Gains....................    3       17,347      3,727
                                                           ---------- ----------
    TOTAL EQUITY...................................   12      633,542    550,422
                                                           ---------- ----------
TOTAL LIABILITIES AND EQUITY.......................        $3,675,839 $2,606,935
                                                           ========== ==========
</TABLE>
 
          See accompanying notes to consolidated financial statements.
     

                                      N-2
<PAGE>
 
     
NEW ENGLAND LIFE INSURANCE COMPANY
 
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF EARNINGS
- --------------------------------------------------------------------------------
 
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995 (DOLLARS IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                               NOTES   1997     1996     1995
                                               ----- -------- -------- --------
<S>                                            <C>   <C>      <C>      <C>
REVENUES
Premiums......................................   4   $ 63,616 $ 37,410 $ 38,566
Universal Life and Investment-Type Product
 Policy Fee Income............................        145,157  101,756   79,371
Net Investment Income.........................   3     61,059   49,628   41,815
Investment Gains (Losses), Net................   3        890    8,822   10,514
Commissions, Fees and Other Income............         28,302   44,930   34,555
                                                     -------- -------- --------
  TOTAL REVENUES..............................        299,024  242,546  204,821
                                                     -------- -------- --------
BENEFITS AND OTHER DEDUCTIONS
Policyholder Benefits.........................   4    100,180   65,520   55,810
Interest Credited to Policyholder Account
 Balances.....................................          6,220    5,558    2,564
Policyholder Dividends........................         21,325   14,830   13,954
Other Operating Costs and Expenses............  10    144,342  143,886   99,424
                                                     -------- -------- --------
  TOTAL BENEFITS AND OTHER DEDUCTIONS.........        272,067  229,794  171,752
                                                     -------- -------- --------
Earnings from Operations before Income Taxes..         26,957   12,752   33,069
Income Taxes..................................   5      4,988    3,051   12,303
                                                     -------- -------- --------
NET EARNINGS..................................       $ 21,969 $  9,701 $ 20,766
                                                     ======== ======== ========
</TABLE>
 
          See accompanying notes to consolidated financial statements.
     

                                      N-3
<PAGE>
 
     
NEW ENGLAND LIFE INSURANCE COMPANY
 
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF EQUITY
- --------------------------------------------------------------------------------
 
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (DOLLARS IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                    COMMON
                                    STOCK &            NET UNREALIZED
                                  CONTRIBUTED RETAINED   INVESTMENT
                                    CAPITAL   EARNINGS GAINS (LOSSES)  TOTAL
                                  ----------- -------- -------------- --------
<S>                               <C>         <C>      <C>            <C>
BALANCES AT DECEMBER 31, 1994....   228,057    15,782         (670)    243,169
Net Earnings.....................              20,766                   20,766
Change in Net Unrealized Invest-
 ment Gains (Losses).............                           27,026      27,026
Contributed Capital..............    63,543                             63,543
                                   --------   -------     --------    --------
BALANCES AT DECEMBER 31, 1995....   291,600    36,548       26,356     354,504
Net Earnings.....................               9,701                    9,701
Change in Net Unrealized Invest-
 ment Gains (Losses).............                          (22,629)    (22,629)
Contributed Capital..............   208,846                            208,846
                                   --------   -------     --------    --------
BALANCES AT DECEMBER 31, 1996....   500,446    46,249        3,727     550,422
Net Earnings.....................              21,969                   21,969
Change in Net Unrealized Invest-
 ment Gains (Losses).............                           13,620      13,620
Contributed Capital..............    47,531                             47,531
                                   --------   -------     --------    --------
BALANCES AT DECEMBER 31, 1997....  $547,977   $68,218     $ 17,347    $633,542
                                   ========   =======     ========    ========
</TABLE>
 
          See accompanying notes to consolidated financial statements.
     
 
                                      N-4
<PAGE>
 
     
NEW ENGLAND LIFE INSURANCE COMPANY
 
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------
 
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (DOLLARS IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                  1997       1996       1995
                                                ---------  ---------  ---------
<S>                                             <C>        <C>        <C>
NET CASH USED BY OPERATING ACTIVITIES.........  $(121,838) $ (85,674) $(111,834)
                                                ---------  ---------  ---------
Cash Flows from Investing Activities:
 Sales, Maturities and Repayments of:
 Available for Sale Fixed Maturities..........    178,003    276,420    538,297
 Held to Maturity Fixed Maturities............         --     10,519        625
 Mortgage Loans on Real Estate................         --      2,210         12
 Other, Net...................................        128         --         --
 Purchases of:
 Available for Sale Fixed Maturities..........   (326,059)  (259,713)  (983,518)
 Real Estate..................................         --       (480)        --
 Fixed Asset Property and Equipment...........       (101)    (3,786)        --
 Other Assets.................................         --    (11,024)       (15)
 Net Change in Short-Term Investments.........    128,616   (135,731)   379,325
 Net Change in Policy Loans...................    (28,520)   (18,052)   (14,243)
 Other, Net...................................        177         67       (114)
                                                ---------  ---------  ---------
NET CASH USED BY INVESTING ACTIVITIES.........    (47,756)  (139,570)   (79,631)
                                                ---------  ---------  ---------
Cash Flows from Financing Activities:
 Common Stock
 Capital Contributions........................     46,681    159,162      9,515
 Borrowed Money...............................     (3,181)        --     25,000
 Policyholder Account Balances
 Deposits.....................................    244,338    482,552    281,762
 Withdrawals..................................    (95,066)  (364,933)  (148,403)
 Financial Reinsurance Receivables............      1,823    (37,519)        --
                                                ---------  ---------  ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES.....    194,595    239,262    167,874
                                                ---------  ---------  ---------
Change in Cash and Cash Equivalents...........     25,001     14,018    (23,591)
Cash and Cash Equivalents, Beginning of Year..     49,147     35,129     58,720
                                                ---------  ---------  ---------
CASH AND CASH EQUIVALENTS, END OF YEAR........  $  74,148  $  49,147  $  35,129
                                                =========  =========  =========
Supplemental Cash Flow Information:
 Interest Paid................................  $   1,495  $   1,523  $   1,277
                                                =========  =========  =========
 Income Taxes Paid............................  $   5,470  $   4,721  $   6,765
                                                =========  =========  =========
NET EARNINGS..................................     21,969      9,701     20,766
Adjustments to Reconcile Net Earnings to Net
 Cash Provided by (Used in) Operating
 Activities:
 Change in Deferred Policy Acquisition Costs,
  Net.........................................   (140,578)   (68,626)   (45,823)
 Change in Accrued Investment Income..........     (4,999)       909    (11,507)
 Change in Premiums and Other Receivables.....    (57,095)     4,370     (4,073)
 Gains from Sales of Investments, Net.........       (890)   (15,979)   (21,980)
 Depreciation and Amortization Expenses.......     10,085      4,120      5,725
 Interest Credited to Policyholder Account
  Balances....................................      6,220      5,558      2,565
 Universal Life and Investment-Type Product
  Policy Fee Income...........................         --   (101,756)   (79,371)
 Change in Future Policy Benefits.............     35,540     18,202     14,539
 Change in Other Policyholder Funds...........      6,309       (283)     1,789
 Change in Policyholder Dividends Payable.....      5,701      1,671        114
 Change in Income Taxes Payable...............      1,674     (6,634)    10,211
 Other, Net...................................     (5,774)    63,073     (4,789)
                                                ---------  ---------  ---------
NET CASH USED BY OPERATING ACTIVITIES.........  $(121,838) $ (85,674) $(111,834)
                                                =========  =========  =========
</TABLE>
 
          See accompanying notes to consolidated financial statements.
     

                                      N-5
<PAGE>
 
     
NEW ENGLAND LIFE INSURANCE COMPANY
 
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
 
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)
 
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
BUSINESS
 
New England Life Insurance Company and its subsidiaries (the Company) is a
wholly-owned stock life insurance subsidiary of Metropolitan Life Insurance
Company (MetLife). The Company principally provides variable life insurance
and variable annuity products through a network of general agencies located
throughout the United States. The Company also provides participating
traditional life insurance, annuity contracts, pension products, as well as,
group life, group medical, and group disability coverage.
 
Prior to the merger of New England Mutual Life Insurance Company (NEMLICO)
with MetLife on August 30, 1996, New England Life Insurance Company (NELICO),
formerly known as New England Variable Life Insurance Company (NEVLICO) was a
subsidiary of NEMLICO. NEMLICO was merged directly into MetLife and ceased to
exist as a separate mutual life insurance company. In conjunction with the
merger, NEVLICO became a subsidiary of MetLife and changed its name to New
England Life Insurance Company. NELICO has continued after the merger to
conduct its existing businesses and is also administering the business
activities of the former parent NEMLICO. (Note 13)
 
NELICO is headquartered in Boston, Massachusetts and became a Massachusetts
chartered company through a legal process known as redomestication. Prior to
the merger, NEVLICO was organized under Delaware law. The capital structure of
NELICO continues in the same form subsequent to the merger with common stock
authorized at 50,000 shares and 20,000 shares issued and outstanding with a
par value of $125 per share. MetLife made an additional statutory capital
contribution to NELICO at the merger date totaling $208,846 consisting of
$129,254 of cash and $79,592 of bonds, real estate, mortgages, common stock of
affiliates and furniture and equipment. Prior to the merger, NELICO received a
capital contribution from NEMLICO for $20,000 in cash. MetLife made an
additional statutory capital contribution to NELICO of $50,000 in cash during
1997, which was offset by $2,469 of returned capital.
 
Certain companies that were subsidiaries of NEMLICO became subsidiaries of
NELICO as of the merger. The principal subsidiaries of which NELICO owns 100%
of the outstanding common stock are: Exeter Reassurance Company, Ltd., New
England Pension and Annuity Company, and Newbury Insurance Company, Limited,
for insurance operations and New England Securities Corporation and TNE
Advisers, Inc. for other operations. On February 28, 1997, NELICO created and
became the sole owner of New England Life Holdings, Inc. which was established
as a holding company for the non-insurance operations of the Company,
principally, New England Securities and TNE Advisers, Inc. The principal
business activities of the subsidiaries are disclosed below.
 
Exeter Reassurance Company, Ltd., (Exeter) was incorporated in Bermuda on
November 15, 1994, and registered as an insurer under The Insurance Act 1978
(Bermuda). Exeter engages in financial reinsurance of life insurance and
annuity policies.
 
New England Pension and Annuity Company (NEPA) was incorporated under the laws
of the State of Delaware on September 12, 1980. NEPA holds licenses in 20
states, but is currently not actively engaged in the sale or distribution of
insurance products.
 
New England Securities Corporation (NES), a National Association of Securities
Dealers (NASD) registered broker/dealer, conducts business as a wholesale
distributor of investment products through the sales force of NELICO.
Established in 1968, NES offers a range of investment products including
mutual funds, investment partnerships, and individual securities. In 1994, NES
became a Registered Investment Advisor with the Securities and Exchange
Commission (SEC) and now offers individually managed portfolios. NES is the
national distributor for variable annuity and variable life products issued by
NELICO. NES is the sole owner of Hereford Insurance Agency, Inc.
      
 
                                      N-6
<PAGE>
 
     
NEW ENGLAND LIFE INSURANCE COMPANY
 
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
- --------------------------------------------------------------------------------
 
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)
 
Newbury Insurance Company, Limited (Newbury) was incorporated in Bermuda on
May 1, 1987, and is registered as a Class 2 insurer under The Insurance Act
1978 (Bermuda). Newbury provides professional liability and personal injury
coverage to the agents of NELICO through a facultative reinsurance agreement
with Lexington Insurance Company. The policy applies to claims made during the
policy period or during the discovery period with limits of $1,000 each claim,
$1,000 annual aggregate each insured, $3,500, $3,500 and $3,000 annual
aggregate all insured in 1997, 1996 and 1995 respectively.
 
TNE Advisers, Inc. was incorporated on August 26, 1994, and is registered as
an investment adviser with the SEC, under the Investment Advisers Act of 1940.
TNE Advisers, Inc. was organized to serve as an investment adviser to certain
mutual funds of the New England Zenith Fund and does not intend to engage in
any business activities other than providing investment management and
administrative services.
 
BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION
 
The accompanying consolidated financial statements have been prepared in
conformity with generally accepted accounting principles (GAAP), and include
the accounts of NELICO and its subsidiaries in which NELICO has control and a
majority economic interest. The consolidated financial statements have been
prepared as though the current reporting entity had always existed.
Significant intercompany transactions and balances have been eliminated in
consolidation.
 
Prior to 1996, NELICO, as a wholly owned stock life insurance subsidiary of a
mutual life insurance company, prepared its financial statements in conformity
with accounting practices prescribed or permitted by the Insurance Department
of the State of Delaware (statutory financial statements), which accounting
practices were considered to be GAAP. In 1996, NELICO adopted Interpretation
No. 40, APPLICABILITY OF GENERALLY ACCEPTED ACCOUNTING PRINCIPLES TO MUTUAL
LIFE INSURANCE AND OTHER ENTERPRISES (the "Interpretation") and Statement of
Financial Accounting Standards (SFAS) No. 120, ACCOUNTING AND REPORTING BY
MUTUAL LIFE INSURANCE ENTERPRISES AND BY INSURANCE ENTERPRISES FOR CERTAIN
LONG DURATION PARTICIPATING POLICIES (the "Standard"), of the Financial
Accounting Standards Board (FASB). The Interpretation and Standard required
mutual life insurance companies to adopt all standards promulgated by the FASB
in their general purpose financial statements. The cumulative effect of such
adoption of all applicable authoritative GAAP pronouncements as of January 1,
1994 was reflected in the financial statements of NELICO as an adjustment of
equity at January 1, 1994.
 
As of December 31, 1993, the Company adopted Statement of Financial Accounting
Standard (SFAS) No. 115, "Accounting for Certain Investments in Debt and
Equity Securities", which expanded the use of fair value accounting for those
securities that a company does not have positive intent and ability to hold to
maturity. Implementation of SFAS No. 115 increased consolidated equity by
$105, net of deferred income taxes and adjustments of deferred policy
acquisition costs and future policy benefits.
 
Effective July 1, 1997, management realigned its fixed maturity investment
classifications and transferred all securities classified as held to maturity
to available for sale. As a result, consolidated equity at July 1, 1997
increased by $798, excluding the effects of deferred income taxes, amounts
attributable to participating pension contractholders and adjustments of
deferred policy acquisition costs and future policy benefits.
     
 
                                      N-7
<PAGE>
 
     
NEW ENGLAND LIFE INSURANCE COMPANY
 
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
- --------------------------------------------------------------------------------
 
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)
 
VALUATION OF INVESTMENTS
 
As mentioned above, during 1997 management reclassified all of the company's
fixed maturity securities to available for sale. Accordingly, as of December
31, all of the company's investment securities are carried at estimated fair
value. Prior to this reclassification, certain fixed maturity securities
(principally bonds) were carried at amortized cost. Unrealized investment
gains and losses on investment securities are recorded directly as a separate
component of equity net of related deferred income taxes and adjustments of
deferred policy acquisition costs and future policy benefits. Costs of
securities are adjusted for impairments in value deemed to be other than
temporary. Such adjustments are recorded as realized investment losses. All
securities transactions are recorded on a trade date basis.
 
Real estate is considered held for sale by management and is reported at the
lower of cost or estimated fair market value less allowances for the estimated
cost of sales. No impairment allowance is required on the property.
 
Policy loans are stated at unpaid principal balances which approximates fair
value.
 
Short-term investments are stated at amortized cost which approximates fair
value.
 
Cash and cash equivalents includes cash on hand, amounts due from banks and
highly liquid debt instruments purchased with an original maturity of three
months or less. These are carried at cost, which approximates fair value.
 
INVESTMENT RESULTS
 
Realized investment gains and losses are determined by specific identification
and are presented as a component of revenues. Valuation allowances are netted
against asset categories to which they apply and provisions for losses for
investments are included in investment gains and losses.
 
PROPERTY AND EQUIPMENT
 
Property and equipment and leasehold improvements are included in other assets
and are stated at cost, less accumulated depreciation and amortization.
Depreciation is provided using the straight line method over the estimated
useful lives of the assets which generally range from 4 to 15 years or the
term of the lease, if shorter. Amortization of leasehold improvements is
provided using the straight line method over the lesser of the term of the
leases or the estimated useful life of the improvements.
 
Accumulated depreciation and amortization on property and equipment and
leasehold improvements was $13,203, and $3,118 at December 31, 1997 and 1996,
respectively. Related depreciation and amortization expense was $10,085,
$3,118, and $0 for the years ended December 31, 1997, 1996 and 1995,
respectively.
 
RECOGNITION OF INCOME AND EXPENSES
 
Premiums from traditional life and annuity policies with life contingencies
are generally recognized as income when due. Benefits and expenses are matched
with such income so as to result in the recognition of profits over the life
of the contract. This match is accomplished by means of the provision for
liabilities for future policy benefits and the deferral and subsequent
amortization of policy acquisition costs.
 
Reinsurance allowances for individual non-medical health contracts are
recognized as income when due.
 
Premiums from variable life, universal life and investment-type contracts are
reported as deposits to policyholder account balances. Revenues from these
contracts consist of amounts assessed during the period against policyholder
account balances for mortality charges, policy administration charges and
surrender charges. Policy benefits and claims that are charged to expense
include benefit claims incurred in the period in excess of related
policyholder account balances and interest credited to policyholder account
balances.
     
 
                                      N-8
<PAGE>
 
     
NEW ENGLAND LIFE INSURANCE COMPANY
 
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
- --------------------------------------------------------------------------------
 
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)
 
DEFERRED POLICY ACQUISITION COSTS
 
The costs of acquiring new business, principally commissions, agency and
policy issue expenses, all of which vary with and are primarily related to the
production of new business, have been deferred. Deferred policy acquisition
costs are subject to recoverability testing at the time of policy issue and
loss recognition testing at the end of each accounting period.
 
Deferred policy acquisition costs are amortized over a period up to 40 years
for traditional life, variable life, universal life products and investment-
type products as a constant percentage of estimated gross margins or profits
arising principally from surrender charges and interest, mortality and expense
margins based on historical and anticipated future experience, updated
regularly. The effects of revisions to experience on previous amortization of
deferred policy acquisition costs are reflected in earnings in the period
estimated gross margins or profits are revised.
 
For non-medical health insurance contracts, deferred policy acquisition costs
are amortized over the life of the contracts (generally between 10 and 30
years) in proportion to anticipated reinsurance allowances.
 
FUTURE POLICY BENEFITS AND POLICYHOLDER ACCOUNT BALANCES
 
Future policy benefit liabilities for participating traditional life insurance
policies are equal to the aggregate of net level premium reserve for death and
endowment policy benefits and the liability for terminal dividends. The net
level premium reserve is calculated based on the dividend fund interest rate
and mortality rates guaranteed in calculating the cash surrender values
described in such contracts. Interest rates used in establishing future policy
benefit liabilities range from 4 percent to 5 percent for life insurance
policies.
 
Policyholder account balances for variable life, universal life and
investment-type contracts are equal to the policy account values. The policy
account values represent an accumulation of gross premium payments plus
credited interest less expense and mortality charges and withdrawals.
 
Benefit liabilities for non-medical health insurance are calculated as the net
GAAP liability plus the unamortized deferred acquisition costs. Benefit
liabilities for disabled lives are estimated using the present value of
benefits method and experience assumptions as to claim terminations, expenses
and interest.
 
INCOME TAXES
 
NELICO and its eligible life insurance subsidiary, Exeter Reassurance Company,
Ltd., files a consolidated federal income tax return. Separate income tax
returns as required are filed for the other life insurance and nonlife
insurance direct subsidiaries. The future tax consequences of temporary
differences between financial reporting and tax basis of assets and
liabilities are measured as of the balance sheet dates and are recorded as
deferred income tax assets or liabilities.
 
SEPARATE ACCOUNT OPERATIONS
 
Separate Accounts are established in conformity with the state insurance laws
and are generally not chargeable with liabilities that arise from any other
business of the Company. Separate Account assets are subject to general
account claims only to the extent the value of such assets exceed the Separate
Account liabilities.
 
Investments held in the Separate Accounts (stated at estimated fair market
value) and liabilities of the Separate Accounts (including participants'
corresponding equity in the Separate Accounts) are reported separately as
assets and liabilities. Deposits to Separate Accounts are reported as
increases in Separate Account liabilities and are not reported in revenues.
Mortality, policy administration and surrender charges to all Separate
Accounts are included in revenues.
     
 
                                      N-9
<PAGE>
 
     
NEW ENGLAND LIFE INSURANCE COMPANY
 
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
- --------------------------------------------------------------------------------
 
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)
 
POLICYHOLDER DIVIDENDS
 
The amount of policyholder dividends to be paid is determined annually by the
Board of Directors. The aggregate amount of policyholder dividends is related
to actual interest, mortality, morbidity and expense experience for the year
and management's judgment as to the appropriate level of statutory surplus to
be retained by the Company.
 
CONSOLIDATED STATEMENTS OF CASH FLOWS--NON CASH TRANSACTIONS
 
For the years ended December 31, 1997, 1996 and 1995, the Company received
capital contributions in the form of transfer of assets of $0, $79,592 and
$54,028, respectively.
 
ESTIMATES
 
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
 
FUTURE APPLICATION OF ACCOUNTING STANDARDS
 
The FASB has issued SFAS No. 130 REPORTING COMPREHENSIVE INCOME which
establishes standards for reporting and presentation of comprehensive income
and its components. Comprehensive income (loss) was $35,589, $(12,928), and
$47,792 in 1997, 1996, and 1995, respectively. Consolidated statements of
comprehensive income, which will be required in 1998, have not been presented
as the Company has not determined the individual amounts to be displayed in
such statements.
 
RECLASSIFICATIONS
 
Certain reclassifications have been made to prior years' amounts to conform to
the 1997 presentation.
     
 
                                     N-10
<PAGE>
 
     
NEW ENGLAND LIFE INSURANCE COMPANY
 
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
- --------------------------------------------------------------------------------
 
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)
 
 
2. INVESTMENTS
 
FIXED MATURITY AND EQUITY SECURITIES
 
The amortized cost, gross unrealized gain (loss) and estimated fair value of
fixed securities and equity securities, by category, are shown below.
 
AVAILABLE FOR SALE SECURITIES
 
<TABLE>
<CAPTION>
                                                    GROSS UNREALIZED
                                          AMORTIZED ---------------- ESTIMATED
                                            COST      GAIN    LOSS   FAIR VALUE
                                          --------- -------- ------- ----------
<S>                                       <C>       <C>      <C>     <C>
DECEMBER 31, 1997
Fixed Maturities:
  U. S. Treasury Securities and
   obligations of U. S. government
   corporations and agencies............. $ 12,105  $    101 $    --  $ 12,206
  Foreign governments....................    2,316        67      --     2,383
  Corporate..............................  620,916    41,564   3,308   659,172
  Mortgage-backed securities.............   57,348     3,282      --    60,630
                                          --------  -------- -------  --------
    Total Fixed Maturities............... $692,685  $ 45,014 $ 3,308  $734,391
                                          ========  ======== =======  ========
Equity Securities:
  Common stocks..........................    9,424       216     241     9,399
                                          --------  -------- -------  --------
    Total Equity Securities.............. $  9,424  $    216 $   241  $  9,399
                                          ========  ======== =======  ========
 
AVAILABLE FOR SALE SECURITIES
 
<CAPTION>
                                                    GROSS UNREALIZED
                                          AMORTIZED ---------------- ESTIMATED
                                            COST      GAIN    LOSS   FAIR VALUE
                                          --------- -------- ------- ----------
<S>                                       <C>       <C>      <C>     <C>
DECEMBER 31, 1996
Fixed Maturities:
  U. S. Treasury Securities and
   obligations of U. S. government
   corporations and agencies............. $  5,465  $     47 $    25  $  5,487
  Foreign governments....................    1,577         1      57     1,521
  Corporate..............................  505,683    18,637   7,093   517,227
  Mortgage-backed securities.............       49         1      --        50
                                          --------  -------- -------  --------
    Total Fixed Maturities............... $512,774  $ 18,686 $ 7,175  $524,285
                                          ========  ======== =======  ========
 
HELD TO MATURITY SECURITIES
 
<CAPTION>
                                                    GROSS UNREALIZED
                                          AMORTIZED ---------------- ESTIMATED
                                            COST      GAIN    LOSS   FAIR VALUE
                                          --------- -------- ------- ----------
<S>                                       <C>       <C>      <C>     <C>
DECEMBER 31, 1996
Fixed Maturities:
  U. S. Treasury Securities and
   obligations of U. S. government
   corporations and agencies............. $  7,299  $     51 $     6  $  7,344
  States and political subdivisions......      480        38      --       518
  Corporate..............................   21,887       860      99    22,648
                                          --------  -------- -------  --------
    Total Fixed Maturities............... $ 29,666  $    949 $   105  $ 30,510
                                          ========  ======== =======  ========
</TABLE>
     

                                      N-11
<PAGE>
 
     
NEW ENGLAND LIFE INSURANCE COMPANY
 
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
- --------------------------------------------------------------------------------
 
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)
 
 
Included in net unrealized investment gains (losses) are unrealized gains on
foreign currency investments as well as unrealized gains on the associated
forward foreign exchange contracts. Unrealized investment gains (losses)
consists of the following:
 
<TABLE>
<CAPTION>
                                                                       1997 1996
                                                                       ---- ----
   <S>                                                                 <C>  <C>
   Net unrealized gains on investments................................ $281 $ 8
   Unrealized gains (losses) on the maturity of forward contracts.....   14  14
                                                                       ---- ---
                                                                       $295 $22
                                                                       ==== ===
</TABLE>
 
The amortized cost and estimated fair value of bonds classified as available
for sale, by contractual maturity, at December 31, 1997 are shown below.
 
<TABLE>
<CAPTION>
                                                            AMORTIZED ESTIMATED
                                                              COST    FAIR VALUE
                                                            --------- ----------
   <S>                                                      <C>       <C>
   Due in one year or less................................. $  5,729   $  5,723
   Due after one year through five years...................   61,395     62,503
   Due after five years through ten years..................  155,795    157,820
   Due after ten years.....................................  412,418    447,715
                                                            --------   --------
     Subtotal..............................................  635,337    673,761
   Mortgage-backed securities..............................   57,348     60,630
                                                            --------   --------
     Total................................................. $692,685   $734,391
                                                            ========   ========
</TABLE>
 
Bonds not due at a single maturity date have been included in the above tables
in the year of final maturity. Expected maturities may differ from contractual
maturities because borrowers may have the right to call or prepay obligations
with or without prepayment penalties.
 
ASSETS HELD IN TRUST FOR THE BENEFIT OF OTHER PARTIES
 
Exeter has deposited in a trust for the benefit of MetLife certain assets for
the purpose of allowing MetLife to record a reserve credit as permitted by
regulations of the State of New York. Under the terms of the Trust Agreement
MetLife enjoys broad powers to withdraw funds from the trust for the payment
of policyholder claims incurred by Exeter under its reinsurance treaty and to
direct the investment of funds held in the trust. The Trust Agreement limits
the types of investments that may be held in trust to cash and certificates of
deposit, U.S. Government bonds and notes and publicly traded securities of
U.S. companies having a National Association of Insurance Commissioners (NAIC)
rating of 1. At December 31, 1997 the trust held $516,491 of bonds and short-
term investments, and at December 31, 1996, the trust held $787 of cash and
$468,847 of bonds and short-term investments.
 
ASSETS ON DEPOSIT
 
As of December 31, 1997 and 1996, the Company had assets on deposit with
regulatory agencies of $7,020 and $5,884, respectively.
     
 
                                     N-12
<PAGE>
 
     
NEW ENGLAND LIFE INSURANCE COMPANY
 
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
- --------------------------------------------------------------------------------
 
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)
 
 
3. NET INVESTMENT INCOME AND INVESTMENT GAINS (LOSSES)
 
The sources of net investment income are as follows:
 
<TABLE>
<CAPTION>
                                                      1997     1996     1995
                                                     -------  -------  -------
   <S>                                               <C>      <C>      <C>
   Fixed maturities................................. $50,348  $44,630  $39,264
   Equity securities................................   4,915       --       --
   Mortgage loans on real estate....................      --      110      234
   Real estate......................................     815       55       --
   Policy loans.....................................   5,081    3,734    2,831
   Cash, cash equivalents and short-term
    investments.....................................   4,160    3,656    1,174
   Other investment income..........................     591       38       --
                                                     -------  -------  -------
   Gross investment income..........................  65,910   52,223   43,503
   Investment expenses..............................  (4,851)  (2,595)  (1,688)
                                                     -------  -------  -------
   Net Investment income............................ $61,059  $49,628  $41,815
                                                     =======  =======  =======
</TABLE>
 
Investment gains (losses) are summarized as follows:
 
<TABLE>
<CAPTION>
                                                        1997    1996    1995
                                                       ------  ------- -------
   <S>                                                 <C>     <C>     <C>
   Fixed maturities................................... $ (774) $15,467 $21,981
   Other..............................................  1,032      512      (1)
                                                       ------  ------- -------
     Subtotal.........................................    258   15,979  21,980
   Investment gains (losses) related to accelerated
    amortization of deferred
    policy acquisition costs..........................   (632)   7,157  11,466
                                                       ------  ------- -------
   Investment gains (losses), net..................... $  890  $ 8,822 $10,514
                                                       ======  ======= =======
</TABLE>
 
Proceeds from the sales of bonds classified as available for sale during 1997,
1996 and 1995 were $143,107, $275,008 and $518,417 respectively. During 1997,
1996 and 1995, respectively, gross gains of $1,846, $19,109 and $22,558, and
gross losses of $1,489, $3,878, and $577 were realized on those sales.
 
Proceeds from the call of direct issue fixed maturities classified as held to
maturity during 1997, 1996 and 1995 were $0, $5,291 and $0, respectively.
During 1997, 1996 and 1995, respectively, gross gains of $0, $236 and $0, and
gross losses of $0, $0 and $0 were realized due to prepayment premiums
received. In 1997 the Company transferred all fixed maturities classified as
held to maturity to available for sale.
     
 
                                     N-13
<PAGE>
 
     
NEW ENGLAND LIFE INSURANCE COMPANY
 
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
- --------------------------------------------------------------------------------
 
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)
 
 
The net unrealized investment gains (losses), which are included in the
consolidated balance sheets as a component of equity and the changes for the
corresponding years are summarized as follows:
 
<TABLE>
<CAPTION>
                                                   1997      1996      1995
                                                 --------  --------  --------
   <S>                                           <C>       <C>       <C>
   Year ended December 31
   Balance, beginning of year................... $  3,727  $ 26,356  $   (670)
     Change in unrealized investment gains
      (losses)..................................   30,207   (46,850)   58,947
     Change in unrealized investment gains
      (losses) attributable to:
       Deferred policy acquisition cost
        allowances..............................   (9,446)   12,211   (17,884)
       Deferred income tax (expense) benefit....   (7,141)   12,010   (14,037)
                                                 --------  --------  --------
   Balance, end of year......................... $ 17,347  $  3,727  $ 26,356
                                                 ========  ========  ========
   December 31
   Balance, end of year, comprised of:
     Unrealized investment gains (losses) on:
       Fixed maturities......................... $ 41,706  $ 11,525  $ 58,369
       Other....................................       22        (4)        2
                                                 --------  --------  --------
                                                   41,728    11,521    58,371
   Amounts of unrealized investment gains
    (losses) attributable to:
     Deferred policy acquisition cost
      allowances................................  (15,202)   (5,756)  (17,967)
     Deferred income tax (expense) benefit......   (9,179)   (2,038)  (14,048)
                                                 --------  --------  --------
   Balance, end of year......................... $ 17,347  $  3,727  $ 26,356
                                                 ========  ========  ========
</TABLE>
 
Net unrealized investment gains at December 31, 1997, before deferred Federal
income tax, reflects gross unrealized gains of $45,014 and gross unrealized
losses of $3,308.
 
4. REINSURANCE AND OTHER INSURANCE TRANSACTIONS
 
In the normal course of business, the Company assumes and cedes reinsurance
with other insurance companies. The accompanying consolidated statements of
earnings are presented net of reinsurance.
 
The effect of reinsurance on premiums earned is as follows:
 
<TABLE>
<CAPTION>
                                                     1997      1996      1995
                                                   --------  --------  --------
   <S>                                             <C>       <C>       <C>
   Direct premiums................................ $ 30,975  $  2,682  $  2,794
   Reinsurance assumed............................   62,315    67,483    69,330
   Reinsurance ceded..............................  (29,674)  (32,755)  (33,558)
                                                   --------  --------  --------
   Net premiums earned............................ $ 63,616  $ 37,410  $ 38,566
                                                   ========  ========  ========
</TABLE>
     
 
                                     N-14
<PAGE>
 
     
NEW ENGLAND LIFE INSURANCE COMPANY
 
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
- --------------------------------------------------------------------------------
 
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)
 
Policyholder benefits in the accompanying consolidated statements of earnings
are presented net of reinsurance recoveries of $55,445, $23,962 and $22,577
for the years ended December 31, 1997, 1996 and 1995, respectively. Premiums
and other receivables in the accompanying consolidated balance sheets include
reinsurance recoveries of $1,489 and $200 at December 31, 1997 and 1996,
respectively.
 
A contingent liability exists with respect to reinsurance ceded should the
reinsurers be unable to meet their obligations.
 
5. INCOME TAXES
 
Income tax expense for U.S. operations has been calculated in accordance with
the provisions of the Internal Revenue Code, as amended (the "Code").
 
NELICO and its eligible life insurance subsidiary, Exeter Reassurance Company,
Ltd., files a consolidated federal income tax return. Separate income tax
returns as required are filed for the other life insurance and nonlife
insurance direct subsidiaries. The Company uses the liability method of
accounting for income taxes. Income tax provisions are based on income
reported for financial statement purposes. Deferred income taxes arise from
the recognition of temporary differences between income determined for
financial reporting purposes and income tax purposes.
 
A summary of income tax expense (benefit) in the consolidated statements of
earnings is shown below:
 
<TABLE>
<CAPTION>
                                                       CURRENT DEFERRED   TOTAL
                                                       ------- --------  -------
   <S>                                                 <C>     <C>       <C>
   1997
   Federal............................................ $8,473  $(3,772)  $ 4,701
   State and Local....................................    316      (29)      287
                                                       ------  -------   -------
     Total............................................ $8,789  $(3,801)  $ 4,988
                                                       ======  =======   =======
   1996
   Federal............................................ $5,333  $(1,531)  $ 3,802
   State and Local....................................     --     (751)     (751)
                                                       ------  -------   -------
     Total............................................ $5,333  $(2,282)  $ 3,051
                                                       ======  =======   =======
   1995
   Federal............................................ $5,504  $ 6,355   $11,859
   State and Local....................................     --      444       444
                                                       ------  -------   -------
       Total.......................................... $5,504  $ 6,799   $12,303
                                                       ======  =======   =======
</TABLE>
 
Reconciliations of the differences between income taxes of operations computed
at the federal statutory tax rates and consolidated provisions for income
taxes are as follows:
 
<TABLE>
<CAPTION>
                                                      1997     1996     1995
                                                     -------  -------  -------
   <S>                                               <C>      <C>      <C>
   Income before taxes.............................. $26,957  $12,752  $33,069
   Income tax rate..................................      35%      35%      35%
                                                     -------  -------  -------
   Expected income tax expense at federal statutory
    income tax rate.................................   9,435    4,463   11,574
   Tax effect of:
     Change in valuation allowance..................      --  (13,948)    (413)
     NOL benefit write-off..........................      --   13,012       --
     State and local income taxes...................  (1,013)    (488)     289
     Other, net.....................................  (3,434)      12      853
                                                     -------  -------  -------
   Income Tax Expense............................... $ 4,988  $ 3,051  $12,303
                                                     =======  =======  =======
</TABLE>
     
 
                                     N-15
<PAGE>
 
     
NEW ENGLAND LIFE INSURANCE COMPANY
 
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
- --------------------------------------------------------------------------------
 
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)
 
 
The net deferred tax liabilities recorded represents the net temporary
differences between the tax bases of assets and liabilities and their amounts
for financial reporting. The components of the net deferred tax liabilities at
December 31, 1997 and 1996 are as follows:
 
<TABLE>
<CAPTION>
                                                            1997       1996
                                                          ---------  ---------
   <S>                                                    <C>        <C>
   Deferred tax assets:
     Policyholder liabilities............................ $  63,723  $  83,304
     Net operating loss carryforward.....................        --     12,548
     Other...............................................    81,988     14,690
                                                          ---------  ---------
       Total gross assets................................   145,711    110,542
                                                          ---------  ---------
   Deferred tax liabilities:
     Investments.........................................    (2,456)    (2,526)
     Deferred policy acquisition costs...................  (168,270)  (132,965)
     Net unrealized capital gains........................    (9,179)    (2,038)
     Other...............................................    (7,872)   (12,476)
                                                          ---------  ---------
       Total gross liabilities...........................  (187,777)  (150,005)
                                                          ---------  ---------
   Net deferred tax liability............................ $ (42,066) $ (39,463)
                                                          =========  =========
</TABLE>
 
The sources of the deferred tax expense (benefit) and their tax effects are as
follows:
 
<TABLE>
<CAPTION>
                                                     1997      1996     1995
                                                   --------  --------  -------
   <S>                                             <C>       <C>       <C>
   Policyholder liabilities....................... $(23,759) $(17,818) $(4,110)
   Net operating loss carryforward................   12,548       464       --
   Investments....................................    1,319        --       --
   Deferred policy acquisition costs..............   33,621    21,828   13,878
   Other, net.....................................  (27,530)   (6,756)  (2,969)
                                                   --------  --------  -------
     Total........................................ $ (3,801) $ (2,282) $ 6,799
                                                   ========  ========  =======
</TABLE>
 
6. EMPLOYEE BENEFIT PLANS
 
Prior to the merger, substantially all employees were employed by NEMLICO and
were covered under the Home Office Retirement Plan and related Select
Employees' Supplemental Retirement Plan (collectively referred to as the
Plans). Subsequent to the merger substantially all of the employees became
employees of the Company and continued to be covered by the Plans, which
became the Plans of the Company. Under the Plans retirement benefits are based
primarily on years of service and the employee's average salary. The Company's
funding policy is to contribute annually an amount that can be deducted for
federal income tax purposes using a different actuarial cost method and
different assumptions from those used for financial reporting purposes. The
Company's net pension cost charged to income in 1997, 1996, and 1995 was $277,
$159, and $150, respectively, which represents the Company's allocation of the
total net periodic pension cost of the Plans as shown below:
 
<TABLE>
<CAPTION>
                                                     1997      1996      1995
                                                   --------  --------  --------
   <S>                                             <C>       <C>       <C>
   Service cost................................... $  5,310  $  5,761  $  4,797
   Interest cost on projected benefit obligation..   13,958    12,489    11,012
   Actual return on assets........................  (22,250)  (15,468)  (21,221)
   Net amortization and deferrals.................   11,092     6,009    13,059
                                                   --------  --------  --------
     Net periodic pension cost.................... $  8,110  $  8,791  $  7,647
                                                   ========  ========  ========
</TABLE>
     
 
                                     N-16
<PAGE>
 
     
NEW ENGLAND LIFE INSURANCE COMPANY
 
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
- --------------------------------------------------------------------------------
 
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)
 
 
The assumed long-term rate of return on assets used in determining the net
periodic pension cost was 8.5 percent.
 
The following information for the Plans includes amounts relating to NEMLICO.
 
<TABLE>
<CAPTION>
                                                              1997      1996
                                                            --------  --------
   <S>                                                      <C>       <C>
   Actuarial present value of accumulated plan benefits.... $143,681  $133,000
                                                            ========  ========
   Projected benefit obligation............................  193,652   182,000
                                                            ========  ========
   Net assets available for plan benefits..................  150,820   130,992
                                                            ========  ========
   Unrecognized prior service cost.........................    2,844       224
                                                            ========  ========
   Unrecognized net (loss) from past experience difference
    from that assumed......................................  (18,936)  (37,327)
                                                            ========  ========
   Unamortized transition gains............................ $  5,832  $  4,015
                                                            ========  ========
</TABLE>
 
The weighted average discount rate was 7.75%, 7.5% and 8.0% in 1997, 1996 and
1995, respectively. The rate of increase in future compensation levels used in
determining the actuarial present value of the projected benefit was 5.0% for
1997, 1996 and 1995. Assets of the Plans consist of bonds, stocks, real
estate, and insurance contracts and have an assumed long-term rate of return
of 8.75% for 1997, and 8.5% for 1996 and 1995.
 
OTHER POSTRETIREMENT BENEFITS
 
Prior to the merger, NEMLICO provided certain health care and life insurance
benefits for retired employees. Substantially all employees would have become
eligible for these benefits had they reached retirement age while working for
NEMLICO. Subsequent to the merger, these benefits are being provided by
MetLife, with respect to benefits earned prior to the merger, and the Company,
with respect to benefits earned subsequent to the merger.
 
As claims were incurred, the Company made contributions to the plan in 1997
and 1996 which were considered immaterial. The total contributions made to the
plan were $3,670 and $3,386, in 1997 and 1996, respectively. The following
table sets forth the plan's fiscal year end funded status:
 
<TABLE>
<CAPTION>
                                                                 1997    1996
                                                                ------- -------
   <S>                                                          <C>     <C>
   Accumulated postretirement benefit obligation:
     Retirees.................................................. $33,823 $28,566
     Fully eligible active plan participants...................   4,487   5,482
     All other actives.........................................  11,114  11,098
                                                                ------- -------
   Total.......................................................  49,424  45,146
     plus: unrecognized net gain...............................  15,726  19,997
                                                                ------- -------
   Accrued postretirement benefit liability.................... $65,150 $65,143
                                                                ======= =======
</TABLE>
 
<TABLE>
<CAPTION>
                                                           1997    1996    1995
                                                          ------  ------  ------
   <S>                                                    <C>     <C>     <C>
   The components of net postretirement benefit cost 
    were:                                            
     Service cost........................................ $  880  $  876  $  876
     Interest cost.......................................  3,690   3,183   3,768
     Amortization of gain................................   (849) (1,155) (1,043)
                                                          ------  ------  ------
   Net periodic postretirement benefit cost.............. $3,721  $2,904  $3,601
                                                          ======  ======  ======
</TABLE>
     
 
                                     N-17
<PAGE>
 
     
NEW ENGLAND LIFE INSURANCE COMPANY
 
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
- --------------------------------------------------------------------------------
 
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)
 
 
Net periodic postretirement benefit costs for the years ended December 31,
1997, 1996 and 1995, includes the cost of benefits earned by active employees,
interest cost, gains and losses arising from differences between actuarial
assumptions and actual experience, and amortization of the transition
obligation. The discount rate used to determine the net periodic
postretirement benefit cost was 7.75%, 7.25% and 8.5% for 1997, 1996 and 1995,
respectively.
 
The discount rate used to determine the accumulated postretirement benefit
obligation was 7.75% and 7.50% as of December 31, 1997 and 1996, respectively.
The health care cost trend rate was 7.8% graded to 5.0% over 8 years for 1997,
and 8.2% graded to 5.0% over 8 years for 1996. The health care cost trend rate
assumption has a minimal impact on the amounts reported, since the Company has
capped its contributions at 200% of 1993 levels.
 
7. LEASES
 
LEASE EXPENSE
 
The Company has entered into various lease agreements for office space, data
processing and other equipment. Future gross minimum rental payments under
non-cancelable leases for 1998 and the succeeding four years are $13,323,
$13,057, $11,765, $10,739 and $10,468, respectively, and $95,762 thereafter.
Minimum future sub-lease rental income on these non-cancelable leases for 1998
and the succeeding four years is $3,553, $3,620, $3,600, $3,578 and $3,578,
respectively, and $15,257 thereafter.
 
8. DEBT
 
In 1995, the Company borrowed $25,000 from a bank, bearing interest at a
variable rate, equal to the greater of the bank's base rate or money market
rates plus 0.6% per annum payable monthly, 5.8% at December 31, 1997 and 5.7%
at December 31, 1996. The loan is collateralized by sales loads and surrender
charges collected on a defined block of variable life insurance policies
issued by the Company. Repayment is structured in a manner to result in
repayment over a term of five years. The carrying value of the loan
approximates its fair value of $21,965, repayments made during 1997 were
$3,181.
 
Exeter privately placed $75,118 aggregate principal amount, subordinated notes
payable (the "Notes"), on December 30, 1994 which are due December 30, 2004,
with no interest payments for the first five years and semiannual interest
payments thereafter. The Notes have been discounted to yield 8.45% for the
first five years and pay interest at 8.845% thereafter. The Notes are
expressly subordinated in right of payment to the insurance liabilities of
Exeter. The Notes are not subject to redemption by Exeter or through the
operation of a sinking fund prior to maturity. Proceeds of the issuance of the
Notes, net of discount, amounted to $50,000. The issue costs of the Notes of
$130 were deducted from Notes, net of discount, to arrive at net subordinated
notes payable of $49,870. The issue cost will be amortized over the life of
the Notes. The Notes are held by MetLife, and the carrying value of the loan
approximates its fair value of $64,016, repayments made during 1997 were $0.
 
9. CONTINGENCIES
 
The Company has no contingent liabilities which might materially affect the
financial position of the Company or the results of its operations. There are
no pending legal proceedings which are beyond the ordinary course of business
which could have a material financial effect.
     
 
                                     N-18
<PAGE>
 
     
NEW ENGLAND LIFE INSURANCE COMPANY
 
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
- --------------------------------------------------------------------------------
 
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)
 
 
10. OTHER OPERATING COSTS AND EXPENSES
 
Other operating costs and expenses consisted of the following:
 
<TABLE>
<CAPTION>
                                                   1997       1996      1995
                                                 ---------  --------  --------
   <S>                                           <C>        <C>       <C>
   Compensation costs........................... $  58,754  $ 36,172  $ 23,630
   Commissions..................................    77,351    51,617    37,476
   Debt expense.................................     6,750     6,261     5,659
   Amortization of policy acquisition costs.....    17,723    22,233    21,199
   Capitalization of policy acquisition costs...  (157,670)  (98,016)  (65,850)
   Rent expense, net of sub-lease income of
    $719, $119 and $0...........................     4,473     3,060     1,609
   Other........................................   136,961   122,559    75,701
                                                 ---------  --------  --------
     Total...................................... $ 144,342  $143,886  $ 99,424
                                                 =========  ========  ========
</TABLE>
 
11. FAIR VALUE INFORMATION
 
The estimated fair value amounts of financial instruments presented below have
been determined by the Company using market information available as of
December 31, 1997 and 1996 and appropriate valuation methodologies. However,
considerable judgment is necessarily required to interpret market data to
develop the estimates of fair value for financial instruments for which there
are no available market value quotations.
 
The use of different market assumptions and/or estimation methodologies may
have a material effect on the estimated fair value amounts.
 
<TABLE>
<CAPTION>
                                                             CARRYING ESTIMATED
                                                              VALUE   FAIR VALUE
                                                             -------- ----------
   <S>                                                       <C>      <C>
   DECEMBER 31, 1997:
   ASSETS
   Fixed Maturities......................................... $734,391  $734,391
   Equity Securities........................................    9,399     9,399
   Policy loans.............................................  104,783   104,783
   Short-term investments...................................   27,944    27,944
   Cash and cash equivalents................................   74,148    74,148
   LIABILITIES
   Policyholder account balances............................    9,271     8,508
   Other policyholder funds.................................    4,324     4,324
   Short and long-term debt.................................   85,981    85,981
   DECEMBER 31, 1996:
   ASSETS
   Fixed Maturities......................................... $553,951  $554,795
   Policy loans.............................................   76,263    76,263
   Short-term investments...................................  156,560   156,560
   Cash and cash equivalents................................   49,147    49,147
   LIABILITIES
   Policyholder account balances............................    3,368     3,168
   Other policyholder funds.................................    2,868     2,868
   Short and long-term debt.................................   84,057    84,057
</TABLE>
     
 
                                     N-19
<PAGE>
 
     
NEW ENGLAND LIFE INSURANCE COMPANY
 
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
- --------------------------------------------------------------------------------
 
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)
 
 
For bonds that are publicly traded, estimated fair value was obtained from an
independent market pricing service. Publicly traded bonds represented
approximately 91% of the carrying value and estimated fair value of the total
bonds as of December 31, 1997 and 96% of the carrying value and estimated fair
value of the total bonds as of December 31, 1996. For all other bonds,
estimated fair value was determined by management, based primarily on interest
rates, maturity, credit quality and average life. Estimated fair values of
policy loans were based on discounted projected cash flows using U.S. Treasury
rates to approximate interest rates and Company experience to project patterns
of loan accrual and repayment. For cash and cash equivalents and short-term
investments, the carrying amount is a reasonable estimate of fair value.
 
The fair values for policyholder account balances are estimated using
discounted projected cash flows, based on interest rates being offered for
similar contracts with maturities consistent with those remaining for the
contracts being valued. Other policyholder funds include liabilities without
defined durations such as policy proceeds and dividends left with the Company.
The estimated fair value of such liabilities, which generally are of short
duration or have periodic adjustments of interest rates, approximates their
carrying value.
 
The estimated fair value of short and long-term debt was determined using
rates currently available to the Company for debt with similar terms and
remaining maturities.
 
12. STATUTORY FINANCIAL INFORMATION
 
The following reconciles statutory net income and statutory surplus and
reflects the corporate reorganization described in Note 1 determined in
accordance with accounting practices prescribed or permitted by insurance
regulatory authorities with net earnings and equity on a GAAP basis.
 
<TABLE>
<CAPTION>
                                                 YEARS ENDED DECEMBER 31,
                                               -------------------------------
                                                 1997       1996       1995
                                               ---------  ---------  ---------
   <S>                                         <C>        <C>        <C>
   Statutory net income (loss)................ $ (37,358) $ (46,021) $     375
   Adjustments to GAAP for life insurance
    companies:
     Future policy benefits and policyholders
      account balances........................  (718,229)   (41,174)    (9,616)
     Deferred policy acquisition costs........   139,947     68,626     45,823
     Deferred Federal Income taxes............     4,009      2,283     (6,799)
     Statutory interest maintenance reserve...       342        231         --
     Other, net...............................   633,258     25,756     (9,017)
                                               ---------  ---------  ---------
   Net GAAP Earnings.......................... $  21,969  $   9,701  $  20,766
                                               =========  =========  =========
<CAPTION>
                                                 YEARS ENDED DECEMBER 31,
                                               -------------------------------
                                                 1997       1996       1995
                                               ---------  ---------  ---------
   <S>                                         <C>        <C>        <C>
   Statutory surplus.......................... $ 307,290  $ 355,853  $ 203,374
   Adjustments to GAAP for life insurance
    companies:
     Future policy benefits and policyholders
      account balances........................  (279,510)  (195,273)  (154,099)
     Deferred policy acquisition costs........   565,769    434,637    353,809
     Deferred Federal Income taxes............   (43,318)   (40,185)   (55,201)
     Valuation of investments.................    56,873     11,503     58,063
     Statutory interest maintenance reserve...       571        306         74
     Statutory investment valuation reserves..     8,388      3,335        373
     Surplus notes............................   (64,016)   (58,911)   (54,210)
     Receivables from reinsurance
      transactions............................    27,519     26,030         --
     Other, net...............................    53,976     13,127      2,320
                                               ---------  ---------  ---------
   GAAP Equity................................ $ 633,542  $ 550,422  $ 354,503
                                               =========  =========  =========
</TABLE>
     
 
                                     N-20
<PAGE>
 
     
NEW ENGLAND LIFE INSURANCE COMPANY
 
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
- --------------------------------------------------------------------------------
 
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)
 
 
13. RELATED PARTY TRANSACTIONS
 
Prior to the merger NELICO operated under a service agreement with its parent
NEMLICO to receive all executive, legal, clerical and other personnel
services. Subsequent to the merger, the Company has entered into a Service
Agreement to provide all administrative, accounting, legal and similar
services to MetLife for certain administered contracts, which are life
insurance and annuity contracts issued by NEMLICO prior to the merger of
NEMLICO and MetLife and those policies and contracts defined in the Service
Agreement as Transition Policies which were sold by the Company's field force
post-merger.
 
The Company charged MetLife $186,757 including accruals for administrative
services on NEMLICO administered contracts for 1997. The Company charged
MetLife $88,043 including accruals for administrative services on NEMLICO
administered contracts for the period of September 1, 1996 through December
31, 1996. Prior to the merger, the Company paid $62,643 to NEMLICO for
administrative services on variable-life and variable-annuity contracts for
the period of January 1, 1996 through August 31, 1996. In 1995, the Company
paid $50,875 to NEMLICO for administrative services. These services were
charged based upon direct costs incurred. Service fees are recorded by NELICO
as a reduction in operating expenses.
 
In 1997, MetLife made a capital contribution to the Company of $50,000 in
cash. In 1996, MetLife made a non-cash capital contribution to the Company of
common stock of affiliated companies consisting of Exeter, NEPA, NES, Newbury,
Omega Reinsurance Corp., TNE Advisers Inc., and TNE Information Services Inc.
with a total estimated statutory fair value of $29,558. MetLife also made non-
cash capital contributions of home-office properties of $10,301, socially-
responsible investments with a book value of $11,916, furniture, equipment and
leasehold improvements of $27,816, and a cash contribution of $128,412. Prior
to the merger, NEMLICO made a cash contribution to NELICO of $20,000.
 
In 1995, NEMLICO made a non-cash capital contribution to NELICO of publicly-
traded debt securities and private-placement obligations with an estimated
fair value of $54,028. NELICO received cash contributions from NEMLICO of
$8,215 in 1995.
 
The Company entered into a lease agreement with MetLife on August 30, 1996 for
the home-office building which it occupies on 501 Boylston Street in Boston,
Massachusetts. The Company paid lease payments to MetLife of $2,340 and $780
in 1997 and 1996, respectively.
 
On June 21, 1996, NEMLICO purchased a mortgage from NELICO for $2,217 which
included principal of $2,204, and interest of $13.
 
Commissions earned by NES from sales of New England Funds (NEF) and State
Street Research (SSR) shares, subsidiaries of MetLife, for 1997 were $16,799
and $1,127, respectively. Included in accrued income at December 31, 1997,
were amounts receivable for sales-based commissions from NEF and SSR totaling
$233 and $13, respectively. In 1997, NES earned asset-based income of $8,777
and $61 on average assets of approximately $3.9 billion and $33 million under
management with NEF and SSR, respectively.
 
Exeter has a privately-placed subordinated notes payable to MetLife for
$64,016 at December 31, 1997 and $58,911 at December 31, 1996.
 
Stockholder dividends or other distributions proposed to be paid by NELICO
must be approved by the Massachusetts Commissioner of Insurance if such
dividends or distributions, together with other dividends or distributions
made within the preceding 12 months, exceeds the greater of (1) 10% of
NELICO's statutory surplus as regards policyholders as of the previous
December 31, or (2) NELICO's statutory net gain from operations for the 12
month period ending the previous December 31.
     
 
                                     N-21
<PAGE>
 
     
NEW ENGLAND LIFE INSURANCE COMPANY
 
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
- --------------------------------------------------------------------------------
 
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)
 
 
Of the statutory profits earned by NELICO on participating policies and
contracts, the portion which shall inure to the benefit of NELICO's
stockholder shall not exceed the larger of (1) 10% of such statutory profits,
or (2) fifty cents per year per thousand dollars of participating life
insurance other than group term insurance in force at the end of the year.
 
14. SUBSEQUENT EVENTS
 
In February 1998, the Company signed a definitive agreement to acquire all of
the outstanding common stock of Nathan Lewis Holding Corp. (Nathan Lewis) a
broker-dealer based in New York City. Under the terms of the agreement, the
Company will pay approximately $28 million in cash at the close and $2 million
per year over the next three years subject to certain financial conditions.
Nathan Lewis had approximately $22 million in assets and earned $2.1 million
on revenues of $78.4 million for the twelve month fiscal period ended
September 30, 1997. The acquisition, which is expected to close in the second
quarter of 1998, will be accounted for as a purchase under generally accepted
accounting principles.
     
 
                                     N-22
<PAGE>
 
     
NEW ENGLAND LIFE INSURANCE COMPANY
 
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
 
To the Board of Directors and Shareholder of
New England Variable Life Insurance Company:
 
We have audited the statutory statements of operations, surplus, and cash
flows of New England Variable Life Insurance Company (a wholly-owned
subsidiary of New England Mutual Life Insurance Company) for the year ended
December 31, 1995. These statutory financial statements (not presented
separately herein) are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
 
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the statements of operations,
surplus, and cash flows are free of material misstatement. An audit includes
examining, on test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management as well as
evaluating the overall presentation of the statements of operations, surplus,
and cash flows. We believe that our audit of the statements of operations,
surplus, and cash flows provides a reasonable basis for our opinion.
 
As described more fully in Note 1 to the aforementioned financial statements,
the Company prepared the statements of operations, surplus, and cash flows
using accounting practices prescribed or permitted by the Insurance Department
of the State of Delaware (SAP), which practices after 1996 (upon issuance of
1996 financial statements) differ from generally accepted accounting
principles (GAAP).
 
In our report dated March 8, 1996, we expressed our opinion that the 1995
statements of operations, surplus, and cash flows, prepared using SAP,
presented fairly, in all material respects the results of operations and cash
flows of New England Variable Life Insurance Company for the year ended
December 31, 1995 in conformity with GAAP. As described in Note 1 to the
aforementioned financial statements, financial statements of wholly-owned
subsidiaries of mutual life insurance enterprises prepared in accordance with
SAP are no longer considered to be presented in conformity with GAAP.
Accordingly, our present opinion on the 1995 statements of operations,
surplus, and cash flows is different from that expressed in our previous
report.
 
In our opinion, because of the effects of the matter discussed in the two
preceding paragraphs, the financial statements referred to above (and not
included herein) do not present fairly, in conformity with GAAP, the results
of operations or cash flows of New England Variable Life Insurance Company for
the year ended December 31, 1995.
 
In our opinion, the statutory financial statements referred to above (and not
included herein) present fairly, in all material respects, the results of
operations and cash flows of New England Variable Life Insurance Company for
the year ended December 31, 1995, on the basis of accounting practices
prescribed or permitted by the Insurance Department of the State of Delaware.
 
                                                       COOPERS & LYBRAND L.L.P.
 
Boston, Massachusetts
March 8, 1996, except for the information in the
second paragraph under "Basis of Presentation
and Principles of Consolidation" of Note 1, for which
the date is February 18, 1997
     
 
                                     N-23
<PAGE>
 
     
NEW ENGLAND LIFE INSURANCE COMPANY
 
- --------------------------------------------------------------------------------
REPORT ON INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
 
To the Board of Directors and Shareholder of
New England Pension and Annuity Company:
 
We have audited the statutory statements of operations and surplus, and cash
flows of New England Pension and Annuity Company (a wholly-owned subsidiary of
New England Mutual Life Insurance Company) for the year ended December 31,
1995. These statutory financial statements (not presented separately herein)
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
 
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the statements of operations and
surplus, and cash flows are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management as well as
evaluating the overall presentation of the statements of operations and
surplus, and cash flows. We believe that our audit of the statements of
operations and surplus, and cash flows provides a reasonable basis for our
opinion.
 
As described more fully in Note 1 to the aforementioned financial statements,
the Company prepared the statements of operations and surplus, and cash flows
using accounting practices prescribed or permitted by the Insurance Department
of the State of Delaware (SAP), which practices after 1996 (upon issuance of
1996 financial statements) differ from generally accepted accounting
principles (GAAP).
 
In our report dated March 8, 1996, we expressed our opinion that the 1995
statements of operations and surplus, and cash flows, prepared using SAP,
presented fairly, in all material respects the results of operations and cash
flows of New England Pension and Annuity Company for the year ended December
31, 1995 in conformity with GAAP. As described in Note 1 to the aforementioned
financial statements, financial statements of wholly-owned subsidiaries of
mutual life insurance enterprises prepared in accordance with SAP are no
longer considered to be presented in conformity with GAAP. Accordingly, our
present opinion on the 1995 statements of operations and surplus, and cash
flows is different from that expressed in our previous report.
 
In our opinion, because of the effects of the matter discussed in the two
preceding paragraphs, the financial statements referred to above (and not
included herein) do not present fairly, in conformity with GAAP, the results
of operations or cash flows of New England Pension and Annuity Company for the
year ended December 31, 1995.
 
In our opinion, the statutory financial statements referred to above (and not
included herein) present fairly, in all material respects, the results of
operations and cash flows of New England Pension and Annuity Company for the
year ended December 31, 1995, on the basis of accounting practices prescribed
or permitted by the Insurance Department of the State of Delaware.
 
COOPERS & LYBRAND L.L.P.
 
Boston, Massachusetts
March 8, 1996, except for the information in the
second paragraph under "Basis of Presentation and
Principles of Consolidation" of Note 1, for which the
date is February 18, 1997
     
 
                                     N-24
<PAGE>
 
     
NEW ENGLAND LIFE INSURANCE COMPANY
 
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
 
April 23, 1996
 
To The Board of Directors and Shareholder of
Exeter Reassurance Company, Ltd.
 
We have audited the statutory statements of operations and surplus, and cash
flows of Exeter Reassurance Company, Ltd. (a wholly-owned subsidiary of New
England Mutual Life Insurance Company) for the year ended December 31, 1995.
These statutory financial statements (not presented separately herein) are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
 
We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
statements of operations and surplus, and cash flows are free of material
misstatement. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation
of the statements of operations and surplus, and cash flows. We believe that
our audit of the statements of operations and surplus, and cash flows provides
a reasonable basis for our opinion.
 
The statutory statements of operations and surplus, and cash flows have been
prepared in conformity with The Insurance Act 1978, amendments thereto and
related regulations and are not intended to be presented in conformity with
accounting principles generally accepted in the United States of America
("U.S. GAAP").
 
In our opinion, because of the effects of the matter discussed in the
preceding paragraph, the financial statements referred to above (and not
included herein) do not present fairly in conformity with U.S. GAAP, the
results of operations or cash flows of Exeter Reassurance Company, Ltd. for
the year ended December 31, 1995. In our opinion, the statutory financial
statements referred to above (and not included herein) present fairly, in all
material respects, the results of operations and cash flows of Exeter
Reassurance Company, Ltd. for the year ended December 31, 1995 in conformity
with the Insurance Act 1978, amendments thereto and related regulations.
 
COOPERS & LYBRAND
CHARTERED ACCOUNTANTS
     
 
                                     N-25
<PAGE>
 
     
NEW ENGLAND LIFE INSURANCE COMPANY
 
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
 
To the Board of Directors and Stockholder of
New England Securities Corporation:
 
We have audited the consolidated statements of operations, shareholder's
equity, and cash flows of New England Securities Corporation for the year
ended December 31, 1995. These financial statements (not presented separately
herein) are the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements based on our audit.
 
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the statements of operations,
shareholder's equity, and cash flows are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall presentation of the statements of operations,
shareholder's equity, and cash flows. We believe that our audit of the
statements of operations, shareholder's equity, and cash flows provides a
reasonable basis for our opinion.
 
In our opinion, the financial statements referred to above (and not included
herein) present fairly, in all material respects, the consolidated results of
operations and cash flows of New England Securities Corporation for the year
ended December 31, 1995 in conformity with generally accepted accounting
principles.
 
COOPERS & LYBRAND L.L.P.
 
Boston, Massachusetts
February 9, 1996
     
 
                                     N-26
<PAGE>
 
     
NEW ENGLAND LIFE INSURANCE COMPANY
 
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
 
To the Shareholder and Board of Directors of
TNE Advisers, Inc.:
 
We have audited the statements of operations, changes in shareholder's equity,
and cash flows of TNE Advisers, Inc. for the year ended December 31, 1995.
These financial statements (not presented separately herein) are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
 
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the statements of operations,
changes in shareholder's equity, and cash flows are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation
of the statements of operations, changes in shareholder's equity, and cash
flows. We believe that our audit of the statements of operations, changes in
shareholder's equity, and cash flows provides a reasonable basis for our
opinion.
 
In our opinion, the financial statements referred to above (and not included
herein) present fairly, in all material respects, the results of operations
and cash flows of TNE Advisers, Inc. for the year ended December 31, 1995, in
conformity with generally accepted accounting principles.
 
                                                       COOPERS & LYBRAND L.L.P.
 
Boston, Massachusetts
February 29, 1996
     
 
                                     N-27
<PAGE>
 
     
NEW ENGLAND LIFE INSURANCE COMPANY
 
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
 
March 14, 1996
 
To The Shareholders of
Newbury Insurance Company, Limited
 
We have audited the statements of earnings and retained earnings, and cash
flows of Newbury Insurance Company, Limited for the year ended December 31,
1995 (not presented separately herein). These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
 
Except as discussed in the following paragraph, we conducted our audit in
accordance with auditing standards generally accepted in the United States of
America. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the statements of earnings and retained
earnings, and cash flows are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall presentation of the statements of earnings and retained
earnings, and cash flows. We believe that our audit of the statements of
earnings and retained earnings, and cash flows provides a reasonable basis for
our opinion.
 
The provision for losses incurred but not reported is calculated in the manner
described in note 3(b). We have not reviewed the underlying information used
in the calculation of the provision and therefore we have been unable to
determine whether the provision for the year ended December 31, 1995 is
adequate, deficient or excessive.
 
In our opinion, except for the effects of such adjustments, if any, that might
have been determined to be necessary had we been able to assess fully the
matter described in the preceding paragraph, the financial statements referred
to above (and not included herein) present fairly, in all material respects,
the results of operations and cash flows of Newbury Insurance Company, Limited
for the year ended December 31, 1995, in conformity with accounting principles
generally accepted in the United States of America.
 
COOPERS & LYBRAND
CHARTERED ACCOUNTANTS
     
 
                                     N-28
<PAGE>
 
                            AMERICAN GROWTH SERIES
 
                     INDIVIDUAL VARIABLE ANNUITY CONTRACTS
                                   ISSUED BY
                      NEW ENGLAND LIFE INSURANCE COMPANY
 
                         SUPPLEMENT DATED MAY 1, 1998
                        TO PROSPECTUS DATED MAY 1, 1998
 
  For Contracts issued in Texas, the minimum guaranteed death benefit will be
recalculated on the sixth Contract Anniversary, and every sixth year
anniversary thereafter until the Contract Owner's (or, if applicable, the
Annuitant's) 76th birthday to determine whether a higher (but never a lower)
guarantee will apply. (For a jointly owned Contract, this recalculation will
be made every six years until the 71st birthday of the older Contract Owner.)
For Contracts issued in other states, these recalculations will occur every
seventh year, as described in the prospectus. For more information about the
minimum guaranteed death benefit, see "Payment on Death Prior to
Annuitization."
 
 
 
VA-154-98
<PAGE>
     
This registration statement incorporates by reference the profile, prospectus 
and statement of additional information each dated May 1, 1998 for the American 
Growth Series variable annuity contracts as filed in Post-Effective Amendment 
No. 5 to the Registration Statement on Form N-4 (File No. 85442). The contract 
described in the May 1, 1998 profile, prospectus and statement of additional 
information will be sold in a given state only until the contract described in 
the profile, prospectus and statement of additional information is approved for 
sale in such state.      

This filing contains a profile in addition to the prospectus for the American 
Growth Series variable annuity contracts.
         

<PAGE>
 
                 NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT
 
                           PART C. OTHER INFORMATION
 
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
 
(a) Financial Statements
 
  The following financial statements of the Registrant are included in Part B
of this Registration Statement:
 
  Statement of Assets and Liabilities as of December 31, 1997.
 
  Statement of Operations for the years ended December 31, 1997 and 1996.
 
  Statement of Changes in Net Assets for the years ended December 31, 1997 and
1996.
 
  Notes to Financial Statements.
 
  The following financial statements of the Depositor are included in Part B of
this Registration Statement:
 
  Consolidated Balance Sheets as of December 31, 1997 and 1996.
 
  Consolidated Statements of Earnings for the years ended December 31, 1997,
1996 and 1995.
 
  Consolidated Statements of Equity for the years ended December 31, 1997, 1996
and 1995.
 
  Consolidated Statements of Cash Flows for the years ended December 31, 1997,
1996 and 1995.
 
  Notes to Financial Statements.
 
(b) Exhibits
 
<TABLE>   
 <C>  <C>   <S>
  (1)       Resolutions of Board of Directors of the Depositor authorizing the
            Registrant is incorporated herein by reference to Post-Effective
            Amendment No. 5 to the Registration Statement on Form N-4 (No. 33-
            85442) filed on May 1, 1998.
  (2)       None.
  (3)   (i) Form of Distribution Agreement is incorporated herein by reference
            to Post-Effective Amendment No. 5 to the Registration Statement on
            Form N-4 (No. 33-85442) filed on May 1, 1998.
       (ii) Form of Selling Agreement with other broker-dealers is incorporated
            herein by reference to Post-Effective Amendment No. 5 to the
            Registration Statement on Form N-4 (No. 33-85442) filed on May 1,
            1998.
      (iii) Additional Form of Selling Agreement with broker-dealers is
            incorporated herein by reference to Registration Statement on Form
            N-4 (No. 33-64879) filed on December 11, 1995.
       (iv) Additional Forms of Selling Agreement is incorporated herein by
            reference to Post-Effective Amendment No. 4 to the Registration
            Statement on Form N-4 (No. 33-85442) filed on April 30, 1997.
  (4)   (i) Variable Annuity Contract is incorporated herein by reference to
            Post-Effective Amendment No. 5 to the Registration Statement on
            Form N-4 (No. 33-85442) filed on May 1, 1998.
       (ii) Forms of Endorsements (TSA, Simple IRA, Living Benefits, Section
            1035 Exchange, Contract Loan, Roth IRA, 72(s) and IRA) are
            incorporated herein by reference to Post-Effective Amendment No. 5
            to the Registration Statement on Form N-4 (No. 33-85442) filed on
            May 1, 1998.
      (iii) Forms of Endorsement (Death Benefit, Contract Loan and Company Name
            Change).
  (5)       Application is incorporated herein by reference to Registration
            Statement on Form N-4 (No. 33-64879) filed on December 11, 1995.
</TABLE>    
 
 
                                     III-1
<PAGE>
 
<TABLE>   
 <C>  <C>   <S>
  (6)   (i) Copy of charter (Amended and restated Articles of Incorporation) is
            incorporated herein by reference to Post-Effective Amendment No. 4
            to the Registration Statement on Form N-4 (No. 33-85442) filed on
            April 30, 1997.
       (ii) Amended and restated By-Laws of Depositor are incorporated herein
            by reference to Post-Effective Amendment No. 5 to the Registration
            Statement on Form N-4 (No. 33-85442) filed on May 1, 1998.
  (7)       None
  (8)       None
  (9)       Opinion and consent of H. James Wilson, Esq.
 (10)   (i) Consent of Coopers & Lybrand L.L.P. and Coopers & Lybrand
       (ii) Consent of Deloitte & Touche, LLP.
      (iii) Consent of Sutherland, Asbill and Brennan, L.L.P.
 (11)       None
 (12)       None
 (13)       Schedule of computations for performance quotations.
 (14)       Powers of Attorney. Additional Powers of Attorney are incorporated
            herein by reference to Post-Effective Amendment No. 4 to the
            Registration Statement on Form N-4 (No. 33-85442) filed on
            April 30, 1997.
</TABLE>    
 
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
 
<TABLE>   
<CAPTION>
      NAME AND PRINCIPAL                       POSITIONS AND OFFICES
       BUSINESS ADDRESS                            WITH DEPOSITOR
      ------------------                       ---------------------
<S>                              <C>
James M. Benson*...............  Chairman, President and Chief Executive Officer
Susan C. Crampton..............  Director
127 Tarbox Road
Jericho, VT 05465
Edward A. Fox..................  Director
SLM Holdings
1050 Thomas Jefferson St., N.W.
Washington, D.C. 20007
George J. Goodman..............  Director
Adam Smith's Money World
50th Floor, Craig Drill Capital
General Motors Building
767 Fifth Street
New York, NY 10153
Dr. Evelyn E. Handler..........  Director
74 Tater Street
Mont Vernon, NH 03057
Philip K. Howard, Esq..........  Director
Howard, Darby & Levin
1330 Avenue of the Americas
New York, NY 10019
Harry P. Kamen.................  Director
Metropolitan Life Insurance
Company
One Madison Avenue
New York, NY 10010
</TABLE>    
 
 
                                     III-2
<PAGE>
 
<TABLE>   
<CAPTION>
     NAME AND PRINCIPAL                     POSITIONS AND OFFICES
      BUSINESS ADDRESS                          WITH DEPOSITOR
     ------------------                     ---------------------
<S>                           <C>
Terence Lennon..............  Director
Metropolitan Life Insurance
Company
One Madison Avenue
New York, NY 10010
Bernard A. Leventhal........  Director
Burlington Industries
1345 Avenue of the Americas
17th F1oor
New York, NY 10105
Thomas J. May...............  Director
Boston Edison Company
800 Boylston Street
Boston, MA 02199
Stewart G. Nagler...........  Director
Metropolitan Life Insurance
Company
One Madison Avenue
New York, NY 10010
Rand N. Stowell.............  Director
United Timber Corp.
P.O. Box 650
Pine Street
Dixfield, ME 04224
Alexander B. Trowbridge.....  Director
Trowbridge Partners Inc.
1317 F Street, NW, Suite 500
Washington, D.C. 20004
David W. Allen*.............  Senior Vice President
Anthony J. Candito..........  President, NEF Information Services and Chief
                              Information Officer
Thom A. Faria*..............  President, Career Agency System (a business unit
                              of NELICO)
Anne M. Goggin*.............  Senior Vice President and Associate General
                              Counsel
Daniel D. Jordan*...........  Second Vice President, Counsel and Secretary
Richard D. Keidan*..........  Senior Vice President
Stephan M. Largent*.........  Senior Vice President
Alan C. Leland, Jr.*........  Senior Vice President
Bruce C. Long*..............  President, New England Annuities (a business unit
                              of NELICO)
George J. Maloof*...........  Senior Vice President
Thomas W. McConnell*........  Senior Vice President
Thomas W. Moore*............  Senior Vice President
Robert W. Powell*...........  President, Life Brokerage (a business unit of
                              NELICO)
Gregory A. Ross*............  Executive Vice President and Chief Information
                              Officer
Robert E. Schneider*........  Executive Vice President, Chief Financial Officer,
                              and Chief Accounting Officer
John G. Small, Jr.*.........  President, New England Services (a business unit
                              of NELICO)
H. James Wilson*............  Executive Vice President and General Counsel
</TABLE>    
 
 
                                     III-3
<PAGE>
 
<TABLE>   
<CAPTION>
     NAME AND PRINCIPAL                     POSITIONS AND OFFICES
      BUSINESS ADDRESS                          WITH DEPOSITOR
     ------------------                     ---------------------
<S>                           <C>
John W. Wright*.............. President, New England Financial Employee Benefits
                              Group (a business unit of NELICO)
Frederick K. Zimmermann*..... Executive Vice President and Chief Investment
                              Officer
</TABLE>    
- --------
* The principal business address for each of the directors and officers is the
  same as NELICO's except where indicated otherwise.
 
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
 
  The following list provides information regarding the entities under common
control with the Depositor. The Depositor is a wholly-owned, indirect
subsidiary of Metropolitan Life Insurance Company, which is organized under
the laws of New York. The Depositor is organized under the laws of
Massachusetts. No person is controlled by the Registrant.
 
           ORGANIZATIONAL STRUCTURE OF METROPOLITAN AND SUBSIDIARIES
                            AS OF DECEMBER 31, 1997
 
  The following is a list of subsidiaries of Metropolitan Life Insurance
Company ("Metropolitan") as of December 31, 1997. Those entities which are
listed at the left margin (labelled with capital letters) are direct
subsidiaries of Metropolitan. Unless otherwise indicated, each entity which is
indented under another entity is a subsidiary of such indented entity and,
therefore, an indirect subsidiary of Metropolitan. Certain inactive
subsidiaries have been omitted from the Metropolitan Organizational listing.
The voting securities (excluding directors' qualifying shares, if any) of the
subsidiaries listed are 100% owned by their respective parent corporations,
unless otherwise indicated. The jurisdiction of domicile of each subsidiary
listed is set forth in the parenthetical following such subsidiary.
 
A. Metropolitan Tower Corp. (Delaware)
 
   1. Metropolitan Property and Casualty Insurance Company (Rhode Island)
 
      a. Metropolitan Group Property and Casualty Insurance Company (Rhode 
         Island)
 
         i. Metropolitan Reinsurance Company (U.K.) Limited (Great Britain)
 
      b. Metropolitan Casualty Insurance Company (Rhode Island)
      c. Metropolitan General Insurance Company (Rhode Island)
      d. First General Insurance Company (Georgia)
      e. Metropolitan P&C Insurance Services, Inc. (California)
      f. Metropolitan Lloyds, Inc. (Texas)
      g. Met P&C Managing General Agency, Inc. (Texas)
 
   2. Metropolitan Insurance and Annuity Company (Delaware)
 
      a. MetLife Europe I, Inc. (Delaware)
      b. MetLife Europe II, Inc. (Delaware)
      c. MetLife Europe III, Inc. (Delaware)
      d. MetLife Europe IV, Inc. (Delaware)
      e. MetLife Europe V, Inc. (Delaware)
      f. MetLife Healthcare Holdings, Inc. (Delaware)
 
  3. MetLife General Insurance Agency, Inc. (Delaware)
 
     a. MetLife General Insurance Agency of Alabama, Inc. (Alabama)
     b. MetLife General Insurance Agency of Kentucky, Inc. (Kentucky)
     c. MetLife General Insurance Agency of Mississippi, Inc. (Mississippi)
     d. MetLife General Insurance Agency of Texas, Inc. (Texas)
     e. MetLife General Insurance Agency of North Carolina, Inc. (North 
        Carolina)
     f. MetLife General Insurance Agency of Massachusetts, Inc. (Massachusetts)
 
                                     III-4
<PAGE>
 
  4. Metropolitan Asset Management Corporation (Delaware)
 
     a. MetLife Capital Holdings, Inc. (Delaware)
 
        i. MetLife Capital Corporation (Delaware)
 
           (1) Searles Cogeneration, Inc. (Delaware)
           (2) MLYC Cogen, Inc. (Delaware)
           (3) MCC Yerkes Inc. (Washington)
           (4) MetLife Capital, Limited Partnership (Delaware). Partnership 
               interests in MetLife Capital, Limited Partnership are held by 
               Metropolitan (90%) and MetLife Capital Corporation (10%).
           (5) CLJFinco, Inc. (Delaware)
               (a) MetLife Capital Credit L.P. (Delaware). Partnership 
                   interests in MetLife Capital Credit L.P. are held by 
                   Metropolitan (90%) and CLJ Finco, Inc. (10%).
 
                   (i) MetLife Capital CFLI Holdings, LLC (DE)
 
                       (1) MetLife Capital CFLI Leasing, LLC (DE)
 
           (6) MetLife Capital Portfolio Investments, Inc. (Nevada)
 
               (a) MetLife Capital Funding Corp. (Delaware)
 
           (7) MetLife Capital Funding Corp. II (Delaware)
 
           (8) MetLife Capital Funding Corp. III (Delaware)
 
      ii.  MetLife Capital Financial Corporation (Delaware) 90% of outstanding 
           equity interest in Metlife Capital Financial Corporation held
           directly by Metropolitan Life Insurance Company.
      iii. MetLife Financial Acceptance Corporation (Delaware).
           MetLife Capital Holdings, Inc. holds 100% of the voting preferred
           stock of MetLife Financial Acceptance Corporation. Metropolitan
           Property and Casualty Insurance Company holds 100% of the common
           stock of MetLife Financial Acceptance Corporation.
 
      iv.  MetLife Capital International Ltd. (Delaware).
 
   b. MetLife Investments Limited (United Kingdom). 23rd Street Investments,
      Inc. holds one share of MetLife Investments Limited.
      
   c. MetLife Investments Asia Limited (Hong Kong). One share of MetLife
      Investments Asia Limited is held by W&C Services, Inc., a nominee of
      Metropolitan Asset Management Corporation.
 
 5. SSRM Holdings, Inc. (Delaware)
 
    a. GFM International Investors Ltd. (United Kingdom).
 
    b. GFM International Investors, Inc. (United Kingdom).
 
       i.  GFM Investments Limited (United Kingdom)
 
    c. State Street Research & Management Company (Delaware). Is a 
       sub-investment manager for the Growth, Income, Diversified and Aggressive
       Growth Portfolios of Metropolitan Series Fund, Inc.
       
       i.  State Street Research Investment Services, Inc. (Massachusetts)
 
    d. SSR Realty Advisors, Inc. (Delaware)
 
       i.  Metric Management Inc. (Delaware)
       ii. Metric Property Management, Inc. (Delaware)
 
           (1) Metric Realty (Delaware). SSR Realty Advisors, Inc. and Metric
               Property Management, Inc. each hold 50% of the common stock of
               Metric Realty.
               
               (a) Metric Institutional Apartment Fund II, L.P. (California). 
                   Metric Realty holds a 1% interest as general partner and
                   Metropolitan holds an approximately 14.6% limited partnership
                   interest in Metric Institutional Apartment Fund II, L.P.
 
           (2) Metric Colorado, Inc. (Colorado). Metric Property Management,
               Inc. holds 80% of the common stock of Metric Colorado, Inc.
 
                                     III-5
<PAGE>
 
           iii. Metric Capital Corporation (California)
           iv.  Metric Assignor, Inc. (California)
           v.   SSR AV, Inc. (Delaware)
 
    6.  MetLife Holdings, Inc. (Delaware)

        a. MetLife Funding, Inc. (Delaware)
        b. MetLife Credit Corp. (Delaware)
 
    7.  Metropolitan Tower Realty Company, Inc. (Delaware)
 
    8.  Met Life Real Estate Advisors, Inc. (California)
 
    9.  Security First Group, Inc. (DE)
 
        a. Security First Life Insurance Company (DE)
 
           (i) Security First Life Insurance Company of Arizona (AZ)
 
        b. Security First Insurance Agency, Inc. (MA)
        c. Security First Financial Insurance Agency, Inc. (NV)
        d. Security First Group of Ohio, Inc. (OH)
        e. Security First Financial, Inc. (DE)
        f. Security First Investment Management Corporation (DE)
        g. Security First Management Corporation (DE)
        h. Security First Real Estate, Inc. (DE)
 
   10. Natiloportem Holdings, Inc. (Delaware)
 
B. Metropolitan Tower Life Insurance Company (Delaware)
 
C. MetLife Security Insurance Company of Louisiana (Louisiana)
 
D. MetLife Texas Holdings, Inc. (Delaware)
 
   1.  Texas Life Insurance Company (Texas)
 
        a. Texas Life Agency Services, Inc. (Texas)
 
        b. Texas Life Agency Services of Kansas, Inc. (Kansas)
 
E. MetLife Securities, Inc. (Delaware)
 
F. 23rd Street Investments, Inc. (Delaware)
 
G. Metropolitan Life Holdings Limited (Ontario, Canada)
 
   1. Metropolitan Life Financial Services Limited (Ontario, Canada)
 
   2. Metropolitan Life Financial Management Limited (Ontario, Canada)
 
      a. Metropolitan Life Insurance Company of Canada (Canada)
 
  3. Morguard Investments Limited (Ontario, Canada)
     Shares of Morguard Investments Limited ("Morguard") are held by
     Metropolitan Life Holdings Limited (72%) and by employees of Morguard 
     (28%).
 
  4. Services La Metropolitaine Quebec, Inc. (Quebec, Canada)
 
H. Santander Met, S.A. (Spain). Shares of Santander Met, S.A. are held by
   Metropolitan (50%) and by an entity (50%) unaffiliated with Metropolitan.
 
  1. Seguros Genesis, S.A. (Spain)
  2. Genesis Seguros Generales, Sociedad Anomina de Seguros y Reaseguros
     (Spain)
 
I. Kolon-Met Life Insurance Company (Korea). Shares of Kolon-MetLife Insurance
   Company are held by Metropolitan (51%) and by an entity (49%) unaffiliated
   with Metropolitan.
 
                                     III-6
<PAGE>
 
J.   Metropolitan Life Seguros de Vida S.A. (Argentina)
 
K.   Metropolitan Life Seguros de Retiro S.A. (Argentina).
 
L.   Met Life Holdings Luxembourg (Luxembourg)
 
M.   Metropolitan Life Holdings, Netherlands BV (Netherlands)
 
N.   MetLife International Holdings, Inc. (Delaware)
 
O.   Metropolitan Life Insurance Company of Hong Kong Limited (Hong Kong)
 
P.   Metropolitan Marine Way Investments Limited (Canada)
 
Q.   P.T. MetLife Sejahtera (Indonesia)
 
R.   Seguros Genesis S.A. (Mexico) Metropolitan holds 85.49%, Metropolitan Tower
     Corp. holds 7.31% and Metropolitan Asset Management Corporation holds 7.20%
     of the common stock of Seguros Genesis S.A.
 
S.   AFORE Genesis Metropolitan S.A. de C.V. (Mexico)
 
T.   Metropolitan Life Seguros E Previdencia Privada S.A. (Brazil)
 
U.   Hyatt Legal Plans, Inc. (Delaware)
 
V.   One Madison Merchandising L.L.C. (Connecticut) Ownership of membership
     interests in One Madison Merchandising L.L.C. is as follows: Metropolitan
     owns 99% and Metropolitan Tower Corp. owns 1%.
 
W.   Metropolitan Realty Management, Inc. (Delaware)
 
     1.  Edison Supply and Distribution, Inc. (Delaware)
 
     2.  Cross & Brown Company (New York)
 
         a. Cross & Brown Associates of New York, Inc. (New York)
 
         b. Cross & Brown Construction Corp. (New York)
 
         c. CBNJ, Inc. (New Jersey)
 
         d. Subrown Corp. (New York)
 
X.   MetPark Funding, Inc. (Delaware)
 
Y.   2154 Trading Corporation (New York)
 
Z.   Transmountain Land & Livestock Company (Montana)
 
A.A. Farmers National Company (Nebraska)
 
     1. Farmers National Commodities, Inc. (Nebraska)
 
A.B. MetLife Trust Company, National Association. (United States)
 
A.C. PESCO Plus, L.C. (Florida). Metropolitan holds a 50% interest in PESCO
     Plus, L.C. and an unaffiliated party holds a 50% interest.
 
     1. Public Employees Equities Services Company (Florida)
 
A.D. Benefit Services Corporation (Georgia)
 
A.E. G.A. Holding Corporation (MA)
 
A.F. TNE-Y, Inc. (DE)
 
A.G. CRH., Inc. (MA)
 
                                     III-7
<PAGE>
 
A.H. NELRECO Troy, Inc. (MA)
 
A.I. TNE Funding Corporation (DE)
 
A.J. L/C Development Corporation (CA)
 
A.K. Boylston Capital Advisors, Inc. (MA)
     1. New England Portfolio Advisors, Inc. (MA)
 
A.L. CRB Co., Inc. (MA) AEW Real Estate Advisors, Inc. holds 49,000 preferred
     non-voting shares of CRB Co., Inc. AEW Advisors, Inc. holds 1,000
     preferred non-voting shares of CRB Co., Inc.
 
A.M. DPA Holding Corp. (MA)
 
A.N. Lyon/Copley Development Corporation (CA)
 
A.O. NEL Partnership Investments I, Inc. (MA)
 
A.P. New England Life Mortgage Funding Corporation (MA)
 
A.Q. Mercadian Capital L.P. (DE). Metropolitan holds a 95% limited partner
     interest and an unaffiliated third party holds 5% of Mercadian Capital
     L.P.
 
A.R. Mercadian Funding L.P. ( DE). Metropolitan holds a 95% limited partner
     interest and an unaffiliated third party holds 5% of Mercadian Funding
     L.P.
 
A.S. MetLife New England Holdings, Inc. (DE)
 
     1. New England Life Insurance Company (MA)
        a. New England Life Holdings, Inc. (DE)
           i. New England Securities Corporation (MA)
              1. Hereford Insurance Agency, Inc. (MA)
              2. Hereford Insurance Agency of Alabama, Inc. (AL)
              3. Heeford Insurance Agency of Minnesota, Inc. (MN)
              4. Hereford Insurance Agency of Ohio, Inc. (OH)
              5. Hereford Insurance Agency of New Mexico, Inc. (NM)
          ii. TNE Advisers, Inc. (MA)
         iii. TNE Information Services, Inc. (MA)
        b. Exeter Reassurance Company, Ltd. (MA)
        c. Omega Reinsurance Corporation (AZ)
        d. New England Pension and Annuity Company (DE)
        e. Newbury Insurance Company, Limited (Bermuda)
 
     2. New England Investment Companies, Inc. (MA)
 
        a. New England Investment Companies, L.P. (DE) New England Investment
           Companies, Inc. holds a 1.7% general partnership interest in New
           England Investment Companies, L.P. MetLife New England Holdings, Inc.
           holds a 3.3% general partnership interest in New England Investment
           Companies, L.P.
 
     3. NEIC Operating Partnership, L.P.
           New England Investment Companies, L.P. holds a 14.2% general
           partnership Interest and New England Investment Companies, Inc. holds
           a 0.00002% general Partnership Interest in NEIC operating
           Partnership, L.P. Metropolitan holds a 46.3% Limited Partnership
           Interest in NEIC Operating Partnership, L.P.
           
        a. NEIC Holdings, Inc. (MA)
 
                                     III-8
<PAGE>
 
i.   Back Bay Advisors, Inc. (MA)
     (1) Back Bay Advisors, L.P. (DE) Back Bay Advisors, Inc. holds a 1% general
         partner interest and NEIC Holdings, Inc. holds a 99% limited partner
         interest in Back Bay Advisors, L.P.
ii.  R & T Asset Management, Inc. (MA)
     (1) Reich & Tang Distributors, L.P. (DE) R & T Asset Management Inc holds a
         1% general interest and R & T Asset Management, L.P. holds a 99.5%
         limited partner interest in Reich Tang Distributors, L.P.
     (2) R & T Asset Management, L.P. R & T Asset Management, Inc. holds a 0.5%
         general partner interest and NEIC Holdings, Inc. hold a 99.5%
         limited partner interest in R & T Asset Management, L.P.
     (3) Reich & Tang Services, L.P. (DE) R & T Asset Management, Inc. holds a
         1% general partner interest and R & T Asset Management, L.P. holds a
         99% limited partner interest in Reich & Tang Services, L.P.
iii. Loomis, Sayles & Company, Inc. (MA)
     (1) Loomis Sayles & Company, L.P. (DE) Loomis Sayles & Company, Inc. holds
         a 1% general partner interest and R & T Asset Management, Inc. holds
         a 99% limited partner interest in Loomis Sayles & Company, L.P.
iv.  Westpeak Investment Advisors, Inc. (MA)
     (1) Westpeak Investment Advisors, L.P. (DE) Westpeak Investment Advisors,
         Inc. holds a 1% general partner interest and Reich & Tang holds a 99%
         limited partner interest in Westpeak Investment Advisors, L.P.
v.   VNSM, Inc. (DE)
     (1) Vaughan, Nelson Scarborough & McConnell, L.P. (DE) VNSM, Inc. holds a 
         1% general partner interest and Reich & Tang Asset Management, Inc.
         holds a 99% limited partner interest in Vaughan, Nelson
         Scarborough & McConnell, L.P.
 
         a. Breen Trust Company
 
vi.  MC Management, Inc. (MA)
     (1) MC Management, L.P. (DE) MC Management, Inc. holds a 1% general partner
         interest and R & T Asset Management, Inc. holds a 99% limited
         partner interest in MC Management, L.P.
vii. Harris Associates, Inc. (DE)
     (1) Harris Associates Securities L.P. (DE) Harris Associates, Inc. holds 
         a 1% general partner interest and Harris Associates L.P. holds a 99%
         limited partner interest in Harris Associates Securities, L.P.
     (2) Harris Associates L.P. (DE) Harris Associates, Inc. holds a 0.33% 
         general partner interest and NEIC Operating Partnership, L.P. holds a
         99.67% limited partner interest in Harris Associates L.P.
         (a) Harris Partners, Inc. (DE)
         (b) Harris Partners L.L.C. (DE) Harris Partners, Inc. holds a 1%
             membership interest and Harris Associates L.P. holds a 99%
             membership interest in Harris Partners L.L.C.
             (i)   Aurora Limited Partnership (DE) Harris Partners L.L.C. holds 
                   a 1% general partner interest
 
             (ii)  Perseus Partners L.P. (DE) Harris Partners L.L.C. holds a 1%
                   general partner interest
 
             (iii) Pleiades Partners L.P. (DE) Harris Partners L.L.C. holds a 1%
                   general partner interest
                   
             (iv)  Stellar Partners L.P. (DE) Harris Partners L.L.C. holds a 1%
                   general partner interest
 
             (v)   SPA Partners L.P. (DE) Harris Partners L.L.C. holds a 1% 
                   general partner interest
viii. Graystone Partners, Inc. (MA)
      (1) Graystone Partners, L.P. (DE) Graystone Partners, Inc. holds a 1% 
          general partner interest and New England NEIC Operating Partnership,
          L.P. holds a 99% limited partner interest in Graystone Partners, L.P.
 
ix.   NEF Corporation (MA)
      (1) New England Funds, L.P. (DE) NEF Corporation holds a 1% general
          partner interest and NEIC Operating Partnership, L.P. holds a 99%
          limited partner interest in New England Funds, L.P.


                                     III-9
<PAGE>
 
         (2) New England Funds Management, L.P. (DE) NEF Corporation holds a 1%
             general partner interest and NEIC Operating Partnership, L.P. holds
             a 99% limited partner interest in New England Funds Management,
             L.P.
      x. New England Investment Associates, Inc.
      xi. Snyder Capital Management, Inc.
         (1) Snyder Capital Management, L.P. NEIC Operating Partnership holds a
             99.5% limited partnership interest and Snyder Capital Management
             Inc. holds a 0.5% general partnership interest.
      xii. Jurika & Voyles, Inc.
         (1) Jurika & Voyles, L.P. NEIC Operating Partnership, L.P. holds a 99%
             limited partnership interest and Jurika & Voyles, Inc. holds a 1%
             general partnership interest.
  b. Capital Growth Management, L.P. (DE)
     NEIC Operating Partnership, L.P. holds a 50% limited partner interest
            in Capital Growth Management, L.P.
 
  c. AEW Capital Management, Inc. (DE)
      i. AEW Securities, L.P. (DE) AEW Capital Management, Inc. holds a 1%
         general partnership and AEW Capital Management, L.P. holds a 99%
         limited partnership interest in AEW Securities, L.P.
 
  d. AEW Capital Management L.P. (DE)
     New England Investment Companies, L.P. holds a 99% limited partner
     interest and AEW Capital Management, Inc. holds a 1% general partner
     interest in AEW Capital Management, L.P.
1. AEW Investment Group, Inc. (MA)
  a. Copley Public Partnership Holding, L.P. (MA)
     AEW Investment Group, Inc. holds a 25% general partnership interest and
     AEW Capital Management, L.P. holds a 75% limited partnership interest
     in Copley Public Partnership Holding, L.P.
  b. AEW Management and Advisors L.P. (MA)
     AEW Investment Group, Inc. holds a 25% general partnership interest and
     AEW Capital Management, L.P. holds a 75% limited partnership interest
     in AEW Management and Advisors L.P.
     i. BBC Investment Advisors, Inc. (MA)
     AEW Investment Group, Inc. holds 60% of the voting securities and
     Back Bay Advisors, L.P. holds 40% of the voting securities of BBC
     Investment Advisors, Inc.
1. BBC Investment Advisors, L.P. (MA)
   BBC Investment Advisors, Inc. holds a 1% general partnership interest and
   AEW Management and Advisors, L.P. holds a 59.4% limited partnership
   interest and Back Bay Advisors, L.P. holds a 39.6% limited partnership
   interest in BBC Investment Advisors, L.P.
   ii. AEW Real Estate Advisors, Inc. (MA)
        1. AEW Advisors, Inc. (MA)
        2. Copley Properties Company, Inc. (MA)
        3. Copley Properties Company II, Inc. (MA)
        4. Copley Properties Company III, Inc. (MA)
        5. Fourth Copley Corp. (MA)
        6. Fifth Copley Corp. (MA)
        7. Sixth Copley Corp. (MA)
        8. Seventh Copley Corp. (MA)
        9. Eighth Copley Corp. (MA)
       10. First Income Corp. (MA)
       11. Second Income Corp. (MA)
       12. Third Income Corp. (MA)
       13. Fourth Income Corp. (MA)
       14. Third Singleton Corp. (MA)
       15. Fourth Singleton Corp. (MA)
       16. Fifth Singleton Corp. (MA)
       17. Sixth Singleton Corp. (MA)
       18. BCOP Associates L.P. (MA)
           AEW Real Estate Advisors, Inc. holds a 1% general partner interest
           in BCOP Associates L.P.
 
                                    III-10
<PAGE>
 
     iii. CREA Western Investors I, Inc. (MA)
          1. CREA Western Investors I, L.P. (DE) CREA Western Investors I, Inc.
             holds a 24.28% general partnership interest and Copley Public
             Partnership Holding, L.P. holds a 57.62% limited partnership
             interest in CREA Western Investors I, L.P.
      iv. CREA Investors Santa Fe Springs, Inc. (MA)
 
  2. Copley Public Partnership Holding, L.P. (DE) AEW Capital Management, L.P.
     holds a 75% limited partner interest and AEW Investment Group, Inc. holds
     a 25% general partner interest and CREA Western Investors I, L.P holds a
     57.62% Limited Partnership interest.
  3. AEW Real Estate Advisors, Limited Partnership (MA) AEW Real Estate
     Advisors, Inc. holds a 25% general partnership interest and AEW Capital
     Management, L.P. holds a 75% limited partnership interest in AEW Real
     Estate Advisors, Limited Partnership.
  4. AEW Hotel Investment Corporation (MA)
    a. AEW Hotel Investment, Limited Partnership (MA) AEW Hotel Investment
       Corporation holds a 1% general partnership interest and AEW Capital
       Management, L.P. holds a 99% limited partnership interest in AEW Hotel
       Investment, Limited Partnership.
  5. Aldrich Eastman Global Investment Strategies, LLC (DE) AEW Capital
     Management, L.P. holds a 25% membership interest and an unaffiliated
     third party holds a 75% membership interest in Aldrich Eastman Global
     Investment Strategies, LLC.
 
In addition to the entities listed above, Metropolitan (or where indicated an
affiliate) also owns an interest in the following entities, among others:
 
  1) CP&S Communications, Inc., a New York corporation, holds federal radio
     communications licenses for equipment used in Metropolitan owned
     facilities and airplanes. It is not engaged in any business.
 
  2) Quadreal Corp., a New York corporation, is the fee holder of a parcel of
     real property subject to a 999 year prepaid lease. It is wholly owned by
     Metropolitan, having been acquired by a wholly owned subsidiary of
     Metropolitan in 1973 in connection with a real estate investment and
     transferred to Metropolitan in 1988.
 
  3) Met Life International Real Estate Equity Shares, Inc., a Delaware
     corporation, is a real estate investment trust. Metropolitan owns
     approximately 18.4% of the outstanding common stock of this company and
     has the right to designate 2 of the 5 members of its Board of Directors.
 
  4) Metropolitan Structures is a general partnership in which Metropolitan
     owns a 50% interest.
 
  5) Interbroker, Correduria de Reaseguros, S.A., is a Spanish insurance
     brokerage company in which Santander Met, S. A., a subsidiary of
     Metropolitan in which Metropolitan owns a 50% mt ST, owns a 50% interest
     and has the right to designate 2 of the 4 members of the Board of
     Directors.
 
  6) Metropolitan owns varying interests in certain mutual funds distributed
     by its affiliates. These ownership interests are generally expected to
     decrease as shares of the funds are purchased by unaffiliated investors.
 
  7) Metropolitan Lloyds Insurance Company of Texas, an affiliated
     association, provides homeowner and related insurance for the Texas
     market. It is an association of individuals designated as underwriters.
     Metropolitan Lloyds, Inc., a subsidiary of Metropolitan Property and
     Casualty Insurance Company ("MET P&C"), serves as the attorney-in-fact
     and manages the association.
 
  8) Mezzanine Investment Limited Partnerships ("MILPs"), Delaware limited
     partnerships, are investment vehicles through which investments in
     certain entities are held. A wholly owned subsidiary of Metropolitan
     serves as the general partner of the limited partnerships and
     Metropolitan directly owns a 99% limited partnership interest in each
     MILP. The MILPs have various's ownership interests in certain companies.
     The various MILPs own, directly or indirectly, more than 50% of the
     voting stock of the following company: Coating Technologies
     International, Inc.
 
NOTE: THE METROPOLITAN LIFE ORGANIZATIONAL CHART DOES NOT INCLUDE REAL
ESTATE--JOINT VENTURES AND PARTNERSHIPS OF WHICH METROPOLITAN LIFE AND/OR ITS
SUBSIDIARIES IS AN INVESTMENT PARTNER. IN ADDITION, CERTAIN INACTIVE
SUBSIDIARIES HAVE ALSO BEEN OMITTED.
 
                                    III-11
<PAGE>
 
   
ITEM 27. NUMBER OF CONTRACTOWNERS
 
  As of May 29, 1998, there were 5013 owners of tax-qualified Contracts and
5060 owners of non-qualified Contracts.     

ITEM 28. INDEMNIFICATION
 
  The Depositor's parent, Metropolitan Life Insurance Company ("MetLife")
maintains a directors' and officers' liability policy with a maximum coverage
of $100 million under which the Depositor and New England Securities
Corporation, the Registrant's underwriter (the "Underwriter"), as well as
certain other subsidiaries of MetLife are covered. A provision in MetLife's
by-laws provides for the indemnification (under certain circumstances) of
individuals serving as directors or officers of certain organizations,
including the Depositor and the Underwriter. A provision in the Depositor's
by-laws provides for the indemnification (under certain circumstances) of
individuals serving as directors or officers or employees of the Depositor.
 
  Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers or controlling persons (if any)
of the Underwriter or Depositor pursuant to the foregoing provisions or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification may be against public
policy as expressed in the Act and may be, therefore, unenforceable.
 
  In the event that a claim for indemnification against such liabilities
(other than the payment by the Depositor or Underwriter of expenses incurred
or paid by a director, officer or controlling person of the Depositor or
Underwriter in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the Depositor or Underwriter will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
 
ITEM 29. PRINCIPAL UNDERWRITERS
 
  (a) New England Securities Corporation also serves as principal underwriter
for:
 
  New England Zenith Fund
  New England Variable Annuity Fund I
  New England Variable Life Separate Account
  New England Retirement Investment Account
  The New England Variable Account
 
  (b) The directors and officers of the Registrant's principal underwriter,
New England Securities Corporation, and their addresses are as follows:
 
<TABLE>
<CAPTION>
                               POSITIONS AND OFFICES       POSITIONS AND OFFICES
           NAME              WITH PRINCIPAL UNDERWRITER       WITH REGISTRANT
           ----              --------------------------    ---------------------
 <C>                       <S>                             <C>
 Thomas W. McConnell*      Director, President and CEO             None
 Frederick K. Zimmermann** Chairman of Board, Director             None
 Bradley W. Anderson*      Vice President                          None
 Anne M. Goggin**          Vice President, General                 None
                           Counsel, Secretary and Clerk
 Mark F. Greco*            Vice President and Chief                None
                           Operating Officer
 Laura A. Hutner*          Vice President                          None
 Mitchell A. Karman**      Vice President                          None
 John Peruzzi**            Assistant Vice President and            None
                           Controller
 Robert F. Regan***        Vice President                          None
 Jonathan M. Rozek*        Vice President                          None
 Andrea M. Ruesch*         Vice President                          None
 Robert E. Schneider**     Director                                None
 Larry Thiel               Vice President                          None
 Michael E. Toland*        Vice President, Chief
                           Compliance Officer, Chief
                           Financial Officer, Treasurer,
                           Assistant Secretary and
                           Assistant Clerk
</TABLE>
 
                                    III-12
<PAGE>
 
  Principal Business Address: *  399 Boylston Street, Boston, MA 02116
                              ** 501 Boylston Street, Boston, MA 02117
                              ***500 Boylston Street, Boston, MA 02117
 
<TABLE>
<CAPTION>
        (C)
    (1)                (2)                (3)             (4)           (5)
      NAME OF    NET UNDERWRITING
     PRINCIPAL    DISCOUNTS AND     COMPENSATION ON    BROKERAGE
    UNDERWRITER    COMMISSIONS        REDEMPTION      COMMISSIONS   COMPENSATION
    -----------  ----------------   ---------------   -----------   ------------
<S>              <C>                <C>               <C>           <C>
New England
 Securities
 Corporation        5,081,873               0               0             0
</TABLE>
 
  Commissions are paid by the Company directly to agents who are registered
representatives of the principal underwriter, or to broker-dealers that have
entered into selling agreements with the principal underwriter with respect to
sales of the Contracts.
 
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
 
  The following companies will maintain possession of the documents required
by Section 31(a) of the Investment Company Act of 1940 and the Rules
thereunder:
 
    (a) Registrant
 
    (b) State Street Bank & Trust Company 225 Franklin Street Boston,
  Massachusetts 02110
 
    (c) New England Securities Corporation 399 Boylston Street Boston,
  Massachusetts 02116
 
    (d) New England Life Insurance Company 501 Boylston Street Boston,
  Massachusetts 02117
 
ITEM 31. MANAGEMENT SERVICES
 
  Not applicable
 
ITEM 32. UNDERTAKINGS
 
  Registrant hereby makes the following undertakings:
 
    (1) To file a post-effective amendment to this registration statement as
  frequently as is necessary to ensure that the audited financial statements
  contained in the registration statement are never more than 16 months old
  for so long as payments under the variable annuity contracts may be
  accepted;
 
    (2) To include either (a) as part of any application to purchase a
  contract offered by the prospectus, a space that an applicant can check to
  request a Statement of Additional Information or (b) a postcard or similar
  written communication affixed to or included in the prospectus that the
  applicant can remove to send for a Statement of Additional Information;
 
    (3) To deliver a Statement of Additional Information and any financial
  statements required to be made available under this Form N-4 promptly upon
  written or oral request;
 
    (4) To offer Contracts to participants in the Texas Optional Retirement
  program in reliance upon Rule 6c-7 of the Investment Company Act of 1940
  and to comply with paragraphs (a)-(d) of that Rule; and
 
    (5) To comply with and rely upon the Securities and Exchange Commission
  No-Action letter to The American Council of Life Insurance, dated November
  28, 1988, regarding Sections 22(e), 27(c)(1) and 27(d) of the Investment
  Company Act of 1940.
 
  New England Life Insurance Company hereby represents that the fees and
charges deducted under the Contracts, in the aggregate, are reasonable in
relation to the services rendered, the expenses to be incurred, and the risks
assumed by New England Life Insurance Company.
 
                                    III-13
<PAGE>
 
                                  SIGNATURES
   
  As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant, New England Variable Annuity Separate Account, has duly
caused this amendment to its Registration Statement to be signed on its
behalf, in the city of Boston, and the Commonwealth of Massachusetts, on the
29th day of June, 1998.     
 
                                          New England Variable Annuity
                                           Separate Account (Registrant)
 
                                          By: New England Life Insurance
                                               Company (Depositor)
 
                                              
                                          By:       /s/ H. James Wilson
                                              ---------------------------------
                                              H. JAMES WILSON, ESQ. EXECUTIVE
                                            VICE PRESIDENT AND GENERAL COUNSEL
 
Attest:
 

         /s/ Marie C. Swift
- -------------------------------------
           MARIE C. SWIFT
 
                                    III-14

<PAGE>
 
   
  As required by the Securities Act of 1933 and the Investment Company of
1940, the Depositor, New England Life Insurance Company, has duly caused this
amendment to its Registration Statement to be signed on its behalf, in the
city of Boston, and the Commonwealth of Massachusetts, on the 29th day of
June, 1998.     
 
 
                                          New England Life Insurance Company
 
(Seal)
 
                                                                        
Attest:   /s/ Marie C. Swift              By:       /s/ H. James Wilson 
        -----------------------------         ---------------------------------
            MARIE C. SWIFT                    H. JAMES WILSON, ESQ. EXECUTIVE
                                            VICE PRESIDENT AND GENERAL COUNSEL
   
  As required by the Securities Act of 1933, this Amendment to the
Registration Statement has been signed below by the following persons, in the
capacities indicated, on June 29, 1998. 
 
                  *                           Chairman, President and Chief
- -------------------------------------               Executive Officer
           JAMES M. BENSON
 
                  *                                     Director
- -------------------------------------
          SUSAN C. CRAMPTON
 
                  *                                     Director
- -------------------------------------
            EDWARD A. FOX
 
                  *                                     Director
- -------------------------------------
          GEORGE J. GOODMAN
 
                  *                                     Director
- -------------------------------------
          EVELYN E. HANDLER
 
                  *                                     Director
- -------------------------------------
          PHILIP K. HOWARD
 
                  *                                     Director
- -------------------------------------
           HARRY P. KAMEN                                             
 
                                    III-15
<PAGE>
 
     
                  *                                     Director
- -------------------------------------
           TERENCE LENNON
 
                  *                                     Director
- -------------------------------------
        BERNARD A. LEVENTHAL
 
                  *                                     Director
- -------------------------------------
            THOMAS J. MAY
 
                  *                                     Director
- -------------------------------------
          STEWART G. NAGLER
 
                  *                          Executive Vice President, Chief
- -------------------------------------          Financial Officer and Chief
         ROBERT E. SCHNEIDER                        Accounting Officer
 
                  *                                     Director
- -------------------------------------
           RAND N. STOWELL
 
                  *                                     Director
- -------------------------------------
       ALEXANDER B. TROWBRIDGE
 
                                              
                                          By:       /s/ Anne M. Goggin 
                                              ---------------------------------
                                                   ANNE M. GOGGIN, ESQ.
                                                     ATTORNEY-IN-FACT
 
- --------
* Executed by Anne M. Goggin, Esq. on behalf of those indicated pursuant to a
  Powers of Attorney filed herewith and incorporated herein by reference to
  Post-Effective Amendment No. 4 to the Registration Statement on Form N-4
  (No. 33-85442) filed on April 30, 1997.       
 
                                    III-16
<PAGE>
 
                                 EXHIBIT INDEX
 
<TABLE>   
 <C>  <C>   <S>
  (1)       Resolutions of Board of Directors of the Depositor authorizing the
            Registrant is incorporated herein by reference to Post-Effective
            Amendment No. 5 to the Registration Statement on Form N-4 (No. 33-
            85442) filed on May 1, 1998.
  (2)       None.
  (3)   (i) Form of Distribution Agreement is incorporated herein by reference
            to Post-Effective Amendment No. 5 to the Registration Statement on
            Form N-4 (No. 33-85442) filed on May 1, 1998.
       (ii) Form of Selling Agreement with other broker-dealers is incorporated
            herein by reference to Post-Effective Amendment No. 5 to the
            Registration Statement on Form N-4 (No. 33-85442) filed on May 1,
            1998.
      (iii) Additional Form of Selling Agreement with broker-dealers is
            incorporated herein by reference to Registration Statement on Form
            N-4 (No. 33-64879) filed on December 11, 1995.
       (iv) Additional Forms of Selling Agreement is incorporated herein by
            reference to Post-Effective Amendment No. 4 to the Registration
            Statement on Form N-4 (No. 33-85442) filed on April 30, 1997.
  (4)   (i) Variable Annuity Contract is incorporated herein by reference to
            Post-Effective Amendment No. 5 to the Registration Statement on
            Form N-4 (No. 33-85442) filed on May 1, 1998.
       (ii) Forms of Endorsements (TSA, Simple IRA, Living Benefits, Section
            1035 Exchange, Contract Loan, Roth IRA, 72(s) and IRA) are
            incorporated herein by reference to Post-Effective Amendment No. 5
            to the Registration Statement on Form N-4 (No. 33-85442) filed on
            May 1, 1998.
      (iii) Forms of Endorsement (Death Benefit, Contract Loan and Company Name
            Change).
  (5)       Application is incorporated herein by reference to Registration
            Statement on Form N-4 (No. 33-64879) filed on December 11, 1995.
  (6)   (i) Copy of charter (Amended and restated Articles of Incorporation) is
            incorporated herein by reference to Post-Effective Amendment No. 4
            to the Registration Statement on Form N-4 (No. 33-85442) filed on
            April 30, 1997.
       (ii) Amended and restated By-Laws of Depositor is incorporated herein by
            reference to Post-Effective Amendment No. 5 to the Registration
            Statement on Form N-4 (No. 33-85442) filed on May 1, 1998.
  (7)       None
  (8)       None
  (9)       Opinion and consent of H. James Wilson, Esq.
 (10)   (i) Consent of Coopers & Lybrand L.L.P. and Coopers & Lybrand
       (ii) Consent of Deloitte & Touche, LLP.
      (iii) Consent of Sutherland, Asbill and Brennan, L.L.P.
 (11)       None
 (12)       None
 (13)       Schedule of computations for performance quotations.
 (14)       Powers of Attorney. Additional Powers of Attorney are incorporated
            herein by reference to Post-Effective Amendment No. 4 to the
            Registration Statement on Form N-4 (No. 33-85442) filed on April
            30, 1997.
</TABLE>    

<PAGE>

                                                                  Exhibit 4(iii)

- -------------------------------------------------------------------------------
Endorsement


As of the Date of Issue of this Contract, this Endorsement is added to the
Contract.


The following changes are made to the Net Investment Factor provision of the
Contract Value Section:

     .    (c) is equal to .0000383562 times the number of days in that Valuation
          Period.

     "The daily deduction of .0000383562 is equal to .014 on an annual basis.
     The deduction of .014 on an annual basis consists of: .0075 for mortality
     risk assumptions; and .0055 for expense risk assumptions; and .001 for an
     administrative asset charge."

is substituted for

     .    (c) is equal to .0000369863 times the number of days in that Valuation
          Period.

     "The daily deduction of .0000369863 is equal to .0135 on an annual basis.
     The deduction of .0135 on an annual basis consists of: .007 for mortality
     risk assumptions; and .0055 for expense risk assumptions; and .001 for an
     administrative asset charge."

The following changes are made to the Death Proceeds provision in the Payment of
Benefits Section:

     "Also, after the Date of Issue, at the beginning of each Minimum Guaranteed
     Death Benefit Recalculation Date shown in Section 1, the Minimum Guaranteed
     Death Benefit will be recalculated, except as noted below. On each of these
     days the Minimum Guaranteed Death Benefit is equal to the greater of: the
     Minimum Guaranteed Death Benefit before the recalculation; and the Contract
     Value on the date of recalculation. If the Owner is not a person, the
     Minimum Guaranteed Death Benefit will be recalculated until the Annuitant
     is age 76. If the Contract is jointly owned, and both Owners are living,
     the Minimum Guaranteed Death Benefit will be recalculated until an Owner is
     age 71. Otherwise, it will be recalculated until the Owner is age 76."
<PAGE>
 
- --------------------------------------------------------------------------------

is substituted for

     "Also, on the seventh anniversary and every seventh year anniversary
     thereafter, except as noted below, the Minimum Guaranteed Death Benefit
     will be recalculated. On each of these days the Minimum Guaranteed Death
     Benefit is equal to the greater of: the Minimum Guaranteed Death Benefit
     before the recalculation; and the Contract Value on the date of
     recalculation. If the Owner is not a person, the Minimum Guaranteed Death
     Benefit will be recalculated until the Annuitant is age 76. If the Contract
     is jointly owned, and both Owners are living, the Minimum Guaranteed Death
     Benefit will be recalculated until an Owner is age 71. Otherwise, it will
     be recalculated until the Owner is age 76."


New England Life Insurance Company
501 Boylston Street, Boston, Massachusetts

      ABCD                             ABCD
   President                        Secretary
<PAGE>
 
                                                                       VE-18-98


- --------------------------------------------------------------------------------
Endorsement


As of the date of the Loan Application for this Contract, the following changes
are made to the Contract.

The following provision is added to the Contract:

Contract Loans


Contract Loans

After the Right to Return the Contract period and before the Maturity Date,
unless the Contract is in force under a Payment Option or is continued under the
Continuation provision, you can borrow all or part of the Loan Value of the
Contract by written request to the Company. Contract Loans are made on the sole
security of the Contract. The amount you can borrow at any time is equal to the
Loan Value less any Contract Loan Balance at that time. Contract Loans will
reduce the Contract's share of the sub-accounts and of the Fixed Account
proportionately, unless you request otherwise. For each Contract Loan from the
Fixed Account, the Contract's share of the Fixed Account will be reduced by the
amounts (plus the interest credited to those amounts) most recently applied to
the Fixed Account. Assets equal to the amount of the Loan: 

 .    Will be transferred to a Loan Collateral Account and held in the general
     investment account of the Company; and

 .    Will earn interest at the effective rate of 4 1/2% per year.

The Contract Loan provision is not intended to satisfy the requirements of the
Employee Retirement Income Security Act of 1974 (ERISA) relating to Plan
Participant Loans. It is the responsibility of the Plan Trustee of ERISA plans
to satisfy those requirements. 

Each year on the contract anniversary and on the date the Contract Loan is
repaid in full, this interest will be credited to the sub-accounts and to the
Fixed Account in the same proportion as net purchase payments are being
allocated to the sub-accounts and to the Fixed Account.

Contract Loans, whether or not repaid, can have a permanent effect on Contract
Values and Death Proceeds.


VE-18-98                                       (continued)
<PAGE>
 
                                                                  VE-18-98


- -----------------------------------------------------------------------------

Loan Value

The Loan Value of the Contract is the amount which, with loan interest, will
equal 90% of the Contract Value projected to the next loan interest due date,
with interest at a rate equivalent to 4 1/2% per year.

Interest on Loans; Contract Loan Balance

Contract Loans accrue interest daily at the rate of 6 1/2% per year. The
Contract Loan Balance at any time means Contract Loans outstanding plus loan
interest accrued to date. Loan interest is due each year on the contract
anniversary. Loan interest not paid when due will reduce the Contract's share of
the sub-accounts and of the Fixed Account proportionately.

Repayment of Loans

Contract Loans may be repaid to the Company at any time in whole or in part.
Loan repayments will be allocated in the same proportion as the Contract Loan
reduced the Contract's share of the sub-accounts and of the Fixed Account,
unless the Company consents to a different allocation. Any amount paid in excess
of the monthly scheduled payment will be allocated in the same proportion as the
Contract Loan reduced the Contract's share of the sub-accounts and of the Fixed
Account, except that the portion which would have been allocated to the Fixed
Account will be allocated to the Money Market sub-account if: 

 .    Payments to the Fixed Account are being restricted by the Company; or

 .    The payment is received by the Company within 180 days from the date of any
     transfer out of or any loan made from the Fixed Account.

The rate of interest for each loan repayment applied to the Fixed Account will
equal at least the lesser of: the rate the borrowed money was receiving at the
time the loan was made from the Fixed Account; and the rate set by the Company
in advance for the date of repayment. 

A Contract Loan is a charge against the Contract. Any Contract Loan Balance will
be deducted from the payment of the proceeds of the Contract.

VE-18-98                                                             (continued)
<PAGE>
 
                                                                  VE-18-98


- ----------------------------------------------------------------------------
If the Contract Loan Balance at any time exceeds the Contract Value of the
Contract, the Company will mail a notice to you and to any assignee. The notice
will be mailed to the addresses on record with the Company. If the excess amount
is not paid to the Company within 31 days after mailing of the notice, the
Contract will be canceled.

The following provision is added to the Contract section:

Postponement of Contract Loans From the Fixed Account

The Company can postpone the making of any Contract Loan from the Fixed Account
for six months from the date you apply.

The following is substituted for the first paragraph of the Contract Value
provision of the Contract Value section: 

On or before the Maturity Date and while the Contract is in force other than
under a Payment Option, the Contract Value is equal to: the number of
Accumulation Units standing to the credit of the Contract multiplied by the
applicable Accumulation Unit Value(s); plus the Contract's Value in the Fixed
Account; plus any amount held for the Contract in a Loan Collateral Account.

The following is substituted for the last sentence of the Annual Fees provision
of the Contract Value section:

The fee will not be charged against the Fixed Account or the Loan Collateral
Account.

The following is substituted for the Surrender of the Contract provision of the
Contract Value section:

VE-18-98                                                             (continued)
<PAGE>
 
                                                                        VE-18-98


- --------------------------------------------------------------------------------
Surrender of the Contract

While the Contract is in force other than under a Payment Option, you can
surrender the Contract at any time prior to the Maturity Date, by notice to the
Company in writing. Upon surrender, the Contract will terminate. The Surrender
Proceeds will be equal to: the Contract Value as of the Surrender Date; less any
Administration Fee; less any Contingent Deferred Sales Charge; less any State
Premium Tax Charge; and less any Contract Loan Balance. Unless a later date is
specified in the request, (see Payment of Benefits, Section 8) the Surrender
Date is the date on which the Company receives at its Home Office: 

 .    Written request in proper form for surrender and payment in one sum; or

 .    Written request in proper form for surrender and payment under one of the
     Payment Options.

You can also make a partial surrender, but the consent of the Company will be
required: if the amount of the partial surrender is less than the Company's
published minimum; or if the Contract Loan Balance would exceed the Loan Value
of the Contract; or if the remaining Contract Value outside of the Loan
Collateral Account would be less than the greater of: 10% of the remaining
Contract Value; and the Company's published minimum. A partial surrender will
reduce the Contract's share of the sub-accounts and the Fixed Account
proportionately, unless you request otherwise. A partial surrender will reduce
the Minimum Guaranteed Death Benefit (see Section 8) proportionately to the
reduction in the Contract Value.

The following is substituted for the first paragraph of the Maturity Proceeds
provision of the Payment of Benefits section:

The Maturity Proceeds will be equal to: the Contract Value on the Maturity Date;
less any Administration Fee; less any State Premium Tax Charge; and less any
Contract Loan Balance.



VE-18-98                                               (continued)
<PAGE>
 
                                                                      VE-18-98


- ------------------------------------------------------------------------------


The following sentence is added to the Death Proceeds provision of the Payment
of Benefits section:

The Death Proceeds will be reduced by the amount of any Contract Loan Balance.

The following sentence is added to Spousal Continuation in the Continuation
provision of the Payment of Benefits section:

The Contract Value to be continued under the Spousal Continuation will be
reduced by any Contract Loan Balance.

New England Life Insurance Company
501 Boylston Street, Boston, Massachusetts

   ABCD                             ABCD
   President                        Secretary





VE-18-98
<PAGE>
 
- --------------------------------------------------------------------------------
Endorsement                        501 Boylston Street, Boston, Massachusetts


As of the Endorsement Date of this Policy or Contract the following changes are
made:

 .    References to the name of the Company are changed from New England Variable
     Life Insurance Company to New England Life Insurance Company, which is a
     Massachusetts corporation.

 .    References to Administrative Office are changed to Home Office.

 .    If this Policy provides for variable life insurance, any change in
     investment policy of the Account will require approval of the Insurance
     Commissioner of the Commonwealth of Massachusetts.

 .    If this Policy or Contract was issued on the Endorsement Date, references
     to New England Mutual Life Insurance Company are changed to New England
     Life Insurance Company.

 .    If there is no New England Life Insurance Company fixed benefit policy
     available for an exchange under any exchange of policy provision or if
     there is no New England Life Insurance Company ordinary life policy
     available under the suicide provision of any variable joint life policy,
     the new policy will be issued by Metropolitan Life Insurance Company.

 .    If this Policy or Contract was issued prior to the Endorsement Date,
     references to New England Mutual Life Insurance Company are changed to
     Metropolitan Life Insurance Company.


New England Life Insurance Company

NEL-409-96


[SIGNATURE APPEARS HERE]            [SIGNATURE APPEARS HERE]
   President                            Secretary
<PAGE>

- --------------------------------------------------------------------------------

Endorsement Date:  August 30, 1996.

<PAGE>
 
                                                                       Exhibit 9
 
New England Life Insurance Company
501 Boylston Street
Boston, MA 02117
 
                                                                 H. James Wilson
                                                                 General Counsel
 

                                               June 29, 1998
 
New England Life Insurance Company
New England Variable Annuity Separate Account
501 Boylston Street
Boston, MA 02117
 
Gentlemen and Ladies:

  In my capacity as General Counsel of New England Life Insurance Company (the
"Company"), I am rendering the following opinion in connection with the filing
with the Securities and Exchange Commission of a post-effective amendment to the
Registration Statement on Form N-4 under the Securities Act of 1933 and the
Investment Company Act of 1940 (File Nos. 33-85442 and 811-8828). This amendment
is being filed with respect to individual variable annuity contracts (the
"Contracts") issued by New England Variable Annuity Separate Account (the
"Account").
 
  In forming the following opinion, I have made such examination of law and
examined such records and other documents as in my judgment are necessary and
appropriate.
 
  It is my opinion that:

  1. The Account is a separate investment account of the Company and is
     validly existing pursuant to the laws of the State of Massachusetts.
 
  2. The Contracts, when issued in accordance with the Prospectus of the Account
     and in compliance with applicable local law, are and will be legal and
     binding obligations of the Company in accordance with their terms.
 
  3. Assets attributable to reserves and other contract liabilities and held in
     the Account will not be chargeable with liabilities arising out of any
     other business the Company may conduct.
 
  I consent to the filing of this opinion as an exhibit to the above-mentioned
amendment to the Registration Statement and to the inclusion of my name under
the caption "Legal Matters" in the Statement of Additional Information filed as
part of this amendment to the Registration Statement on Form N-4.
 
                                           Very truly yours,
 
 
                                           /s/ H. James Wilson
                                           H. James Wilson
                                           General Counsel

<PAGE>
 
                                                                   Exhibit 10(i)



                       CONSENT OF INDEPENDENT ACCOUNTANTS
                       ----------------------------------



We consent to the inclusion in Post-Effective Amendment No. 6 to the
Registration Statement on Form N-4 (File No. 33-85442) of our reports, which
include adverse opinions as to generally accepted accounting principles and
unqualified opinions as to statutory accounting practices prescribed or
permitted by the Insurance Department of the State of Delaware, dated March 8,
1996, except as to the information in the second paragraph under "Basis of
Presentation and Principles of Consolidation" of Note 1, for which the date is
February 18, 1997, on our audits of the statutory financial statements of New
England Variable Life Insurance Company and New England Pension and Annuity
Company. We also consent to the inclusion in this registration statement of our
report, which includes an adverse opinion as to generally accepted accounting
principles and an unqualified opinion as to conformity with The Insurance Act
1978, dated April 23, 1996, on our audit of the statutory financial statements
of Exeter Reassurance Company, Ltd., and our report dated February 9, 1996, on
our audit of New England Securities Corporation, and our report dated February
29, 1996, on our audit of TNE Advisors, Inc., and our report dated March 14,
1996, on our audit of Newbury Insurance Company, Limited. We also consent to the
reference to our firm under the caption "Experts" in this Post-Effective
Amendment.


                                     /s/ Coopers & Lybrand L.L.P.

                                     Coopers & Lybrand         

Boston, Massachusetts
June 26, 1998

<PAGE>
 
                                                                  Exhibit 10(ii)

     INDEPENDENT AUDITORS' CONSENT

     We consent to the use in this Post Effective Amendment No. 6 to the
     Registration Statement  No. 33-85442 of New England Variable Annuity
     Separate Account (the "Separate Account") of New England Life Insurance
     Company, (the "Company") of our reports dated April 17, 1998 and February
     17, 1998, on the financial statements of the Separate Account and the
     Company, respectively, (which expressed unqualified opinions
     and, with respect to the Company, includes an explanatory paragraph
     referring to the change in the basis of accounting and the change in
     corporate organization) for the years December 31, 1997 and 1996 appearing 
     in:

     i)  the Statement of Additional Information included herein, which is part 
         of such Registration Statement, and

     ii) the Statement of Additional Information dated May 1, 1998 as filed
         in Post Effective Amendment No. 5 to the Registration Statement 
         No. 33-85442 which is incorporated by reference in this Post Effective
         Amendment No. 6 to the Registration Statement No. 33-85442.

     We also consent to the reference to us under the heading "Experts" in such
     Statements.



     DELOITTE & TOUCHE LLP
     Boston, Massachusetts
     June 26, 1998

<PAGE>
 
                                                                Exhibit 10 (iii)

Sutherland, Asbill & Brennan LLP 


                  CONSENT OF SUTHERLAND, ASBILL & BRENNAN LLP


     We consent to the reference to our firm under the heading "Legal Matters"
in the Statements of Additional Information included in Post-Effective Amendment
No. 6 to the Registration Statement on Form N-4 for certain variable annuity
contracts issued through New England Variable Annuity Separate Account of New
England Life Insurance Company (File No. 33-85442). In giving this consent, we
do not admit that we are in the category of persons whose consent is required
under Section 7 of the Securities Act of 1933.



                                                SUTHERLAND, ASBILL & BRENNAN LLP


                                                By: /s/ Kimberly J. Smith
Washington, D.C.                                    ----------------------------
June 29, 1998                                       Kimberly J. Smith







<PAGE>
 

                                                                      Exhibit 13
<TABLE> 
<CAPTION> 

CALCULATION     $10,000 Single Payment                   0 :Prem Tax

Contract Values
                 Bond          Money                                      BI            MM   Surr chrg calc
               Income         Market     Paymts        Fee              UV's          UV's
<S>         <C>            <C>          <C>            <C>          <C>           <C>        <C>                <C>            <C> 
  9/1/83    10,000.00      10,000.00    $10,000          0           0.99348      1.001274
12/31/83    10,339.37      10,258.58          0          0          1.027196      1.027165               1      0.07           4
  9/1/84    10,625.58      10,842.79          0        -30          1.058611      1.088664               1      0.07           0
12/31/84    11,453.64      11,175.33          0          0          1.141109      1.122053               2      0.06           4
  9/1/85    12,593.02      11,657.00          0        -30          1.257613      1.173427               2      0.06           0
12/31/85    13,388.01      11,905.85          0          0          1.337005      1.198477               3      0.05           4
  9/1/86    14,831.74      12,331.67          0        -30           1.48418      1.244361               3      0.05           0
12/31/86    15,137.25      12,514.93          0          0          1.514752      1.262853               4      0.04           4
  9/1/87    14,996.03      12,884.67          0        -30          1.503622       1.30319               4      0.04           0
12/31/87    15,242.29      13,122.50          0          0          1.528314      1.327245               5      0.03           4
  9/1/88    15,940.27      13,588.92          0        -30          1.601307      1.377454               5      0.03           0
12/31/88    16,265.41      13,889.20          0          0           1.63397      1.407892               6      0.02           4
  9/1/89    17,520.76      14,596.31          0        -30          1.763092       1.48261               6      0.02           0
12/31/89    17,990.51      14,940.99          0          0          1.810362      1.517621               7      0.01           4
  9/1/90    18,245.63      15,581.75          0        -30          1.839054      1.585753               7      0.01           0
12/31/90    19,151.96      15,916.76          0          0          1.930406      1.619846               8         0           4
  9/1/91    20,606.23      16,427.16          0        -30          2.080012      1.674843               8         0           0
12/31/91    22,256.26      16,648.65          0          0          2.246568      1.697425               9         0           4
  9/1/92    23,658.80      16,917.25          0        -30           2.39117      1.727869               9         0           0
12/31/92    23,722.99      17,018.46          0          0          2.397657      1.738206              10         0           4
  9/1/93    26,306.63      17,169.69          0        -30          2.661815      1.756716              10         0           0
12/31/93    26,326.49      17,259.12          0          0          2.663825      1.765866              11         0           4
  9/1/94    25,430.60      17,474.26          0        -30           2.57621      1.790948              11         0           0
12/31/94    25,071.19      17,674.12          0          0          2.539801      1.811432              12         0           4
  9/1/95    28,510.93      18,156.51          0        -30          2.891298      1.863947              12         0           0
12/31/95    29,948.08      18,401.18          0          0          3.037039      1.889065              13         0           4
  9/1/96    29,268.23      18,822.77          0        -30          2.971138      1.935425              13         0           0
12/31/96    30,873.63      19,053.27          0          0          3.134109      1.959126              14         0           4
  9/1/97    32,434.94      19,515.39          0        -30          3.295649      2.009727              14         0           0
12/31/97    33,745.26      19,770.95          0          0          3.428788      2.036045              15         0           4

<CAPTION> 
                            $10,000 Single Payment

Surrender Values     No Premium Tax            free withdrawal amounts
                            Money                                     Money
                Bond       Market                         Bond       Market
              Income                                    Income
<S>        <C>          <C>              <C>         <C>          <C> 
                                           9/1/83
 12/31/83   9,675.62     9,600.48        12/31/83         1000         1000
   9/1/84                                  9/1/84
 12/31/84  10,843.64    10,565.33        12/31/84    1453.6407    1175.3331
   9/1/85                                  9/1/85
 12/31/85  12,878.01    11,395.85        12/31/85    3388.0115    1905.8543
   9/1/86                                  9/1/86
 12/31/86  14,727.25    12,104.93        12/31/86    5137.2515    2514.9296
   9/1/87                                  9/1/87
 12/31/87  14,932.29    12,812.50        12/31/87    5242.2869    3122.5034
   9/1/88                                  9/1/88
 12/31/88  16,055.41    13,679.20        12/31/88    6265.4107    3889.1993
   9/1/89                                  9/1/89
 12/31/89  17,880.51    14,830.99        12/31/89    7990.5066    4940.9943
   9/1/90                                  9/1/90
 12/31/90  19,141.96    15,906.76        12/31/90    9151.9559    5916.7555
   9/1/91                                  9/1/91
 12/31/91  22,246.26    16,638.65        12/31/91    12256.262    6638.6494
   9/1/92                                  9/1/92
 12/31/92  23,712.99    17,008.46        12/31/92    13722.987    7018.4573
   9/1/93                                  9/1/93
 12/31/93  26,316.49    17,249.12        12/31/93    16326.493     7259.115
   9/1/94                                  9/1/94
 12/31/94  25,061.19    17,664.12        12/31/94    15071.192    7674.1222
   9/1/95                                  9/1/95
 12/31/95  29,938.08    18,391.18        12/31/95    19948.076    8401.1822
   9/1/96
 12/31/96  30,863.63    19,043.27        12/31/96    20873.633    9053.2716
   9/1/97
 12/31/97  33,735.26    19,760.95        12/31/97    23745.259    9770.9463

<CAPTION> 

PERCENT CHANGE                                            PERCENT CHANGE

  ending          Bond          Money                       ending        Bond        Money
    date        Income         Market                         date      Income       Market
<S>             <C>            <C>                        <C>           <C>          <C>  
12/31/83         3.39%          2.59%                     12/31/83      -3.24%       -4.00%
  9/1/84         2.77%          5.69%                       9/1/84
12/31/84         7.79%          3.07%                     12/31/84      12.07%       10.05%
  9/1/85         9.95%          4.31%                       9/1/85
12/31/85         6.31%          2.13%                     12/31/85      18.76%        7.86%
  9/1/86        10.78%          3.58%                       9/1/86
12/31/86         2.06%          1.49%                     12/31/86      14.36%        6.22%
  9/1/87        -0.93%          2.95%                       9/1/87
12/31/87         1.64%          1.85%                     12/31/87       1.39%        5.85%
  9/1/88         4.58%          3.55%                       9/1/88
12/31/88         2.04%          2.21%                     12/31/88       7.52%        6.76%
  9/1/89         7.72%          5.09%                       9/1/89
12/31/89         2.68%          2.36%                     12/31/89      11.37%        8.42%
  9/1/90         1.42%          4.29%                       9/1/90
</TABLE> 

<PAGE>
 

PERCENT CHANGE                               PERCENT CHANGE

 ending         Bond           Money         ending        Bond         Money
  date         Income         Market          date        Income       Market
  ----         ------         ------          ----        ------       ------

12/31/90        4.97%          2.15%        12/31/90       7.05%        7.25%
  9/1/91        7.59%          3.21%          9/1/91
12/31/91        8.01%          1.35%        12/31/91      16.22%        4.60%
  9/1/92        6.30%          1.61%          9/1/92
12/31/92        0.27%          0.60%        12/31/92       6.59%        2.22%
  9/1/93       10.89%          0.89%          9/1/93
12/31/93        0.08%          0.52%        12/31/93      10.98%        1.41%
  9/1/94       -3.40%          1.25%          9/1/94
12/31/94       -1.41%          1.14%        12/31/94      -4.77%        2.41%
  9/1/95       13.72%          2.73%          9/1/95
12/31/95        5.04%          1.35%        12/31/95      19.46%        4.12%
  9/1/96       -2.27%          2.29%          9/1/96
12/31/96        5.49%          1.22%        12/31/96       3.09%        3.55%
  9/1/97        5.06%          2.43%          9/1/97
12/31/97        4.04%          1.31%        12/31/97       9.30%        3.77%

<PAGE>
 
<TABLE> 
<CAPTION> 
 Annual Eff Rate:            8.32%         4.14%                     8.19%         3.95%

 CALCULATION               $250 Payment per month               Prem tax:              0

                                No Premium Tax

           Cumulative         Bond         Money                       Net
             Payments       Income        Market      Paymts        Paymts           Fee            UV's          UV's
 <S>       <C>           <C>           <C>            <C>           <C>              <C>        <C>           <C> 
  9/1/83          250       250.00        250.00         250           250             0         0.99348      1.001274
 10/1/83          500       506.34        501.55         250           250             0        1.018677      1.007481
 11/1/83          750       755.69        754.95         250           250             0        1.017372      1.014309
 12/1/83        1,000     1,013.51      1,009.70         250           250             0        1.027899       1.02069
12/31/83        1,000     1,012.82      1,016.10           0             0             0        1.027196      1.027165
  1/1/84        1,250     1,262.82      1,266.10         250           250             0        1.027196      1.027165
  2/1/84        1,500     1,533.65      1,525.19         250           250             0        1.044139      1.034533
  3/1/84        1,750     1,773.52      1,784.73         250           250             0        1.037246      1.041005
  4/1/84        2,000     2,014.22      2,046.12         250           250             0        1.031808      1.047651
  5/1/84        2,250     2,261.84      2,311.06         250           250             0        1.030587      1.055299
  6/1/84        2,500     2,475.42      2,578.33         250           250             0        1.013992      1.063187
  7/1/84        2,750     2,738.39      2,846.48         250           250             0        1.019306      1.070672
  8/1/84        3,000     3,067.13      3,120.90         250           250             0        1.048613      1.079854
  9/1/84        3,250     3,316.37      3,366.36         250           250           -30        1.058611      1.088664
 10/1/84        3,500     3,618.33      3,644.66         250           250             0        1.075196      1.097818
 11/1/84        3,750     3,996.90      3,924.18         250           250             0        1.113401      1.106709
 12/1/84        4,000     4,300.87      4,201.42         250           250             0        1.128435       1.11439
12/31/84        4,000     4,349.17      4,230.31           0             0             0        1.141109      1.122053
  1/1/85        4,250     4,599.17      4,480.31         250           250             0        1.141109      1.122053
  2/1/85        4,500     4,905.93      4,759.36         250           250             0        1.155192      1.129329
  3/1/85        4,750     5,110.46      5,034.61         250           250             0        1.144484       1.13532
  4/1/85        5,000     5,430.87      5,314.36         250           250             0        1.160252      1.142029
  5/1/85        5,250     5,800.18      5,595.06         250           250             0        1.185743      1.148626
  6/1/85        5,500     6,294.95      5,876.05         250           250             0        1.235781      1.154988
  7/1/85        5,750     6,614.11      6,158.80         250           250             0        1.249359      1.161425
  8/1/85        6,000     6,820.17      6,441.81         250           250             0        1.241059      1.167651
  9/1/85        6,250     7,131.15      6,693.68         250           250           -30        1.257613      1.173427
 10/1/85        6,500     7,403.29      6,980.46         250           250             0        1.261518      1.179876
 11/1/85        6,750     7,741.62      7,267.80         250           250             0        1.276569      1.186187
 12/1/85        7,000     8,136.57      7,552.74         250           250             0        1.300472      1.191889
12/31/85        7,000     8,365.15      7,594.48           0             0             0        1.337005      1.198477
  1/1/86        7,250     8,615.15      7,844.48         250           250             0        1.337005      1.198477
  2/1/86        7,500     8,882.36      8,136.26         250           250             0        1.339677      1.204859
  3/1/86        7,750     9,430.13      8,425.25         250           250             0        1.384588      1.210633
  4/1/86        8,000     9,944.78      8,720.21         250           250             0        1.423445      1.217094
  5/1/86        8,250    10,258.77      9,011.73         250           250             0        1.432604      1.222889
  6/1/86        8,500    10,402.23      9,301.49         250           250             0        1.417726      1.228284
  7/1/86        8,750    10,817.23      9,595.64         250           250             0        1.440214      1.234114
  8/1/86        9,000    11,112.78      9,888.60         250           250             0        1.446278      1.239639
  9/1/86        9,250    11,624.00     10,146.26         250           250           -30         1.48418      1.244361
 10/1/86        9,500    11,841.36     10,437.60         250           250             0        1.480012       1.24943
 11/1/86        9,750    12,236.96     10,724.28         250           250             0         1.49821      1.253821
 12/1/86       10,000    12,643.90     11,013.16         250           250             0        1.517425      1.258367
12/31/86       10,000    12,621.63     11,052.42           0             0             0        1.514752      1.262853

<CAPTION> 
            Surrender Values            surrender charge                    free withdrawal amt.

           Bond          Money          Bond       Money                      Bond        Money
         Income         Market        Income       Market                   Income       Market
   <S> <C>           <C>             <C>          <C>          <C>          <C>          <C>  
   0                                                             9/1/83 
   1                                                            10/1/83 
   2                                                            11/1/83 
   3                                                            12/1/83 
   4     933.67         936.73        69.15        69.38       12/31/83         25           25
   4                                                             1/1/84
   5                                                             2/1/84
   6                                                             3/1/84
   7                                                             4/1/84
   8                                                             5/1/84
   9                                                             6/1/84
  10                                                             7/1/84
  11                                                             8/1/84
   0                                                             9/1/84
   1                                                            10/1/84
   2                                                            11/1/84
   3                                                            12/1/84
   4   4,069.17       3,957.75       270.00       262.56       12/31/84   349.1719     336.6357
   4                                                             1/1/85
   5                                                             2/1/85
   6                                                             3/1/85
   7                                                             4/1/85
   8                                                             5/1/85
   9                                                             6/1/85
  10                                                             7/1/85
  11                                                             8/1/85
   0                                                             9/1/85
   1                                                            10/1/85
   2                                                            11/1/85
   3                                                            12/1/85
   4   7,915.15       7,149.73       440.00       434.76       12/31/85   1365.147     669.3677
   4                                                             1/1/86
   5                                                             2/1/86
   6                                                             3/1/86
   7                                                             4/1/86
   8                                                             5/1/86
   9                                                             6/1/86
  10                                                             7/1/86
  11                                                             8/1/86
   0                                                             9/1/86
   1                                                            10/1/86
   2                                                            11/1/86
   3                                                            12/1/86
   4  12,031.63      10,462.42       580.00       580.00       12/31/86    2621.63     1052.423
</TABLE> 
<PAGE>
 
<TABLE> 
<CAPTION> 
 Annual Eff Rate:            8.32%         4.14%                     8.19%         3.95%

 CALCULATION                  $250 Payment per month            Prem tax:              0

                                No Premium Tax

           Cumulative         Bond         Money                       Net
             Payments       Income        Market      Paymts        Paymts           Fee              UV's          UV's
 <S>       <C>           <C>           <C>            <C>           <C>              <C>          <C>           <C> 
  1/1/87       10,250    12,871.63     11,302.42         250           250             0          1.514752      1.262853
  2/1/87       10,500    13,446.78     11,592.69         250           250             0          1.553016      1.267352
  3/1/87       10,750    13,774.11     11,880.93         250           250             0          1.561947      1.271533
  4/1/87       11,000    13,951.08     12,178.09         250           250             0          1.553666       1.27658
  5/1/87       11,250    13,721.50     12,473.37         250           250             0          1.500257      1.281326
  6/1/87       11,500    13,930.08     12,774.05         250           250             0          1.495729      1.286532
  7/1/87       11,750    14,311.88     13,077.13         250           250             0           1.50988      1.291878
  8/1/87       12,000    14,551.61     13,382.64         250           250             0          1.508797      1.297362
  9/1/87       12,250    14,721.70     13,662.76         250           250           -30          1.503622       1.30319
 10/1/87       12,500    14,635.30     13,971.04         250           250             0          1.469263      1.308749
 11/1/87       12,750    15,114.30     14,283.19         250           250             0          1.492253      1.314571
 12/1/87       13,000    15,577.08     14,603.27         250           250             0          1.513261      1.321021
12/31/87       13,000    15,732.03     14,672.07           0             0             0          1.528314      1.327245
  1/1/88       13,250    15,982.03     14,922.07         250           250             0          1.528314      1.327245
  2/1/88       13,500    16,738.18     15,246.59         250           250             0          1.576716      1.333873
  3/1/88       13,750    17,185.59     15,561.84         250           250             0          1.595311      1.339582
  4/1/88       14,000    17,292.77     15,879.01         250           250             0          1.582054      1.345364
  5/1/88       14,250    17,494.61     16,194.78         250           250             0          1.577648      1.350936
  6/1/88       14,500    17,763.88     16,523.10         250           250             0          1.579385      1.357469
  7/1/88       14,750    18,255.29     16,847.93         250           250             0          1.600849      1.363617
  8/1/88       15,000    18,468.07     17,180.70         250           250             0          1.597585      1.370316
  9/1/88       15,250    18,731.09     17,490.19         250           250           -30          1.601307      1.377454
 10/1/88       15,500    19,302.11     17,829.04         250           250             0           1.62875      1.384451
 11/1/88       15,750    19,808.78     18,179.60         250           250             0          1.650409       1.39226
 12/1/88       16,000    19,909.67     18,527.89         250           250             0          1.637985      1.399787
12/31/88       16,000    19,860.86     18,635.16           0             0             0           1.63397      1.407892
  1/1/89       16,250    20,110.86     18,885.16         250           250             0           1.63397      1.407892
  2/1/89       16,500    20,544.24     19,253.49         250           250             0          1.648869      1.416713
  3/1/89       16,750    20,757.65     19,613.83         250           250             0          1.645932      1.424832
  4/1/89       17,000    21,079.85     19,991.89         250           250             0          1.651657      1.434135
  5/1/89       17,250    21,634.74     20,381.99         250           250             0          1.675546      1.444185
  6/1/89       17,500    22,359.85     20,774.32         250           250             0          1.712342       1.45427
  7/1/89       17,750    23,065.76     21,155.54         250           250             0          1.747256      1.463456
  8/1/89       18,000    23,743.04     21,548.90         250           250             0          1.779623      1.473373
  9/1/89       18,250    23,742.49     21,904.00         250           250           -30          1.763092       1.48261
 10/1/89       18,500    24,000.80     22,280.25         250           250             0          1.763709      1.491156
 11/1/89       18,750    24,757.25     22,668.61         250           250             0          1.800926      1.500416
 12/1/89       19,000    25,118.52     23,048.17         250           250             0           1.80902      1.508991
12/31/89       19,000    25,137.16     23,179.98           0             0             0          1.810362      1.517621
  1/1/90       19,250    25,387.16     23,429.98         250           250             0          1.810362      1.517621
  2/1/90       19,500    25,323.61     23,816.47         250           250             0          1.788003      1.526462
  3/1/90       19,750    25,539.48     24,187.22         250           250             0          1.785593      1.534201
  4/1/90       20,000    25,865.61     24,569.27         250           250             0          1.790916      1.542577
  5/1/90       20,250    25,782.52     24,957.79         250           250             0          1.767853      1.551274
  6/1/90       20,500    26,939.93     25,349.85         250           250             0          1.830072      1.560104
  7/1/90       20,750    27,379.85     25,733.81         250           250             0          1.842974      1.568348
  8/1/90       21,000    28,098.69     26,131.78         250           250             0          1.874532      1.577366

<CAPTION> 

            Surrender Values             surrender charge                       free withdrawal amt.

           Bond          Money          Bond        Money                          Bond        Money
          Income         Market        Income       Market                       Income       Market
<S>       <C>            <C>           <C>          <C>              <C>        <C>          <C> 
 4                                                                    1/1/87
 5                                                                    2/1/87
 6                                                                    3/1/87
 7                                                                    4/1/87
 8                                                                    5/1/87
 9                                                                    6/1/87
10                                                                    7/1/87
11                                                                    8/1/87
 0                                                                    9/1/87
 1                                                                   10/1/87
 2                                                                   11/1/87
 3                                                                   12/1/87
 4         15,032.03      13,972.07       690.00       690.00       12/31/87    2732.03      1672.071 
 4                                                                    1/1/88
 5                                                                    2/1/88
 6                                                                    3/1/88
 7                                                                    4/1/88
 8                                                                    5/1/88
 9                                                                    6/1/88
10                                                                    7/1/88
11                                                                    8/1/88
 0                                                                    9/1/88
 1                                                                   10/1/88
 2                                                                   11/1/88
 3                                                                   12/1/88
 4         19,080.86      17,855.16       770.00       770.00       12/31/88   3860.864      2635.165
 4                                                                    1/1/89
 5                                                                    2/1/89
 6                                                                    3/1/89
 7                                                                    4/1/89
 8                                                                    5/1/89
 9                                                                    6/1/89
10                                                                    7/1/89
11                                                                    8/1/89
 0                                                                    9/1/89
 1                                                                   10/1/89
 2                                                                   11/1/89
 3                                                                   12/1/89
 4         24,307.16      22,349.98       820.00       820.00       12/31/89   6137.155       4179.98
 4                                                                    1/1/90
 5                                                                    2/1/90
 6                                                                    3/1/90
 7                                                                    4/1/90
 8                                                                    5/1/90
 9                                                                    6/1/90
10                                                                    7/1/90
11                                                                    8/1/90
</TABLE> 

<PAGE>
 
<TABLE> 
<CAPTION> 
 Annual Eff Rate:            8.32%         4.14%                     8.19%         3.95%

 CALCULATION          $250 Payment per month                   Prem tax:               0

                                No Premium Tax

           Cumulative         Bond         Money                       Net
             Payments       Income        Market      Paymts        Paymts           Fee            UV's          UV's
 <S>       <C>           <C>           <C>            <C>           <C>              <C>        <C>           <C> 
  9/1/90       21,250    27,786.89     26,490.72         250           250           -30        1.839054      1.585753
 10/1/90       21,500    28,361.51     26,884.39         250           250             0        1.860539      1.594353
 11/1/90       21,750    28,890.50     27,281.28         250           250             0        1.878841      1.603064
 12/1/90       22,000    29,627.04     27,669.29         250           250             0        1.910482      1.611174
12/31/90       22,000    29,936.01     27,818.22           0             0             0        1.930406      1.619846
  1/1/91       22,250    30,186.01     28,068.22         250           250             0        1.930406      1.619846
  2/1/91       22,500    30,900.71     28,469.82         250           250             0        1.960124      1.628595
  3/1/91       22,750    31,090.73     28,844.29         250           250             0        1.956319      1.635715
  4/1/91       23,000    31,690.41     29,226.24         250           250             0        1.978322      1.643198
  5/1/91       23,250    32,321.60     29,596.60         250           250             0        2.002118      1.649965
  6/1/91       23,500    32,694.51     29,961.69         250           250             0        2.009732      1.656381
  7/1/91       23,750    32,855.92     30,326.46         250           250             0        2.004286      1.662726
  8/1/91       24,000    33,460.69     30,691.52         250           250             0        2.025928      1.669034
  9/1/91       24,250    34,573.96     31,018.34         250           250           -30        2.080012      1.674843
 10/1/91       24,500    35,596.66     31,382.98         250           250             0        2.126499      1.681033
 11/1/91       24,750    36,074.30     31,741.93         250           250             0        2.140098      1.686869
 12/1/91       25,000    36,665.66     32,087.41         250           250             0        2.160349      1.691943
12/31/91       25,000    38,128.98     32,191.37           0             0             0        2.246568      1.697425
  1/1/92       25,250    38,378.98     32,441.37         250           250             0        2.246568      1.697425
  2/1/92       25,500    38,047.60     32,784.94         250           250             0        2.212536      1.702321
  3/1/92       25,750    38,481.81     33,114.35         250           250             0        2.223248      1.706444
  4/1/92       26,000    38,594.94     33,444.65         250           250             0        2.215341      1.710582
  5/1/92       26,250    38,836.02     33,767.54         250           250             0        2.214829       1.71431
  6/1/92       26,500    39,681.50     34,089.08         250           250             0        2.248789      1.717942
  7/1/92       26,750    40,797.30     34,406.52         250           250             0        2.297855      1.721341
  8/1/92       27,000    42,234.01     34,722.90         250           250             0        2.364695      1.724662
  9/1/92       27,250    42,926.86     35,007.47         250           250           -30         2.39117      1.727869
 10/1/92       27,500    43,935.96     35,312.13         250           250             0        2.433454      1.730567
 11/1/92       27,750    43,041.49     35,615.37         250           250             0        2.370066      1.733176
 12/1/92       28,000    43,053.55     35,917.13         250           250             0        2.356964      1.735695
12/31/92       28,000    43,796.87     35,969.09           0             0             0        2.397657      1.738206
  1/1/93       28,250    44,046.87     36,219.09         250           250             0        2.397657      1.738206
  2/1/93       28,500    45,375.88     36,526.31         250           250             0        2.456392      1.740952
  3/1/93       28,750    46,877.40     36,823.90         250           250             0        2.524142       1.74322
  4/1/93       29,000    46,979.30     37,122.40         250           250             0        2.516168      1.745516
  5/1/93       29,250    47,609.73     37,417.80         250           250             0        2.536543      1.747651
  6/1/93       29,500    48,067.30     37,717.01         250           250             0        2.547602      1.749949
  7/1/93       29,750    49,123.93     38,013.78         250           250             0        2.590354      1.752119
  8/1/93       30,000    49,687.54     38,313.50         250           250             0        2.606891      1.754411
  9/1/93       30,250    50,954.39     38,583.84         250           250           -30        2.661815      1.756716
 10/1/93       30,500    51,358.70     38,881.81         250           250             0        2.669876        1.7589
 11/1/93       30,750    51,549.82     39,182.98         250           250             0        2.666815      1.761215
 12/1/93       31,000    51,512.60     39,483.80         250           250             0        2.651956      1.763499
12/31/93       31,000    51,743.14     39,536.79           0             0             0        2.663825      1.765866
  1/1/94       31,250    51,993.14     39,786.79         250           250             0        2.663825      1.765866
  2/1/94       31,500    52,832.40     40,092.87         250           250             0        2.694015      1.768355
  3/1/94       31,750    51,799.94     40,392.28         250           250             0        2.62862       1.770534

<CAPTION> 
               Surrender Values           surrender charge                       free withdrawal amt.

             Bond          Money          Bond        Money                          Bond        Money
            Income         Market        Income       Market                       Income       Market
<S>       <C>            <C>             <C>          <C>           <C>         <C>           <C>  
 0                                                                    9/1/90
 1                                                                   10/1/90
 2                                                                   11/1/90
 3                                                                   12/1/90
 4         29,086.01      26,968.22       840.00       840.00       12/31/90      7936.01     5818.222
 4                                                                    1/1/91
 5                                                                    2/1/91
 6                                                                    3/1/91
 7                                                                    4/1/91
 8                                                                    5/1/91
 9                                                                    6/1/91
10                                                                    7/1/91
11                                                                    8/1/91
 0                                                                    9/1/91
 1                                                                   10/1/91
 2                                                                   11/1/91
 3                                                                   12/1/91
 4         37,278.98      31,341.37       840.00       840.00       12/31/91     13128.98      7191.37
 4                                                                    1/1/92
 5                                                                    2/1/92
 6                                                                    3/1/92
 7                                                                    4/1/92
 8                                                                    5/1/92
 9                                                                    6/1/92
10                                                                    7/1/92
11                                                                    8/1/92
 0                                                                    9/1/92
 1                                                                   10/1/92
 2                                                                   11/1/92
 3                                                                   12/1/92
 4         42,946.87      35,119.09       840.00       840.00       12/31/92     15796.87     7969.095
 4                                                                    1/1/93
 5                                                                    2/1/93
 6                                                                    3/1/93
 7                                                                    4/1/93
 8                                                                    5/1/93
 9                                                                    6/1/93
10                                                                    7/1/93
11                                                                    8/1/93
 0                                                                    9/1/93
 1                                                                   10/1/93
 2                                                                   11/1/93
 3                                                                   12/1/93
 4         50,893.14      38,686.79       840.00       840.00       12/31/93     20743.14     8536.793
 4                                                                    1/1/94
 5                                                                    2/1/94
 6                                                                    3/1/94
</TABLE> 

<PAGE>
 
<TABLE> 
<CAPTION> 
 Annual Eff Rate:            8.32%         4.14%                     8.19%         3.95%

 CALCULATION                  $250 Payment per month            Prem tax:              0

                                No Premium Tax
          Cumulative          Bond         Money                       Net
            Payments        Income        Market      Paymts        Paymts           Fee            UV's          UV's
 <S>      <C>            <C>           <C>            <C>           <C>              <C>        <C>           <C> 
  4/1/94      32,000     50,972.09     40,699.33         250           250             0        2.573924      1.773035
  5/1/94      32,250     50,736.81     41,013.28         250           250             0        2.549419      1.775821
  6/1/94      32,500     50,780.83     41,339.06         250           250             0        2.539069      1.779102
  7/1/94      32,750     50,720.24     41,669.87         250           250             0        2.523539      1.78258
  8/1/94      33,000     51,777.97     42,013.92         250           250             0        2.563727      1.786603
  9/1/94      33,250     52,250.08     42,336.09         250           250           -30        2.57621       1.790948
 10/1/94      33,500     51,884.71     42,688.43         250           250             0        2.545869      1.795277
 11/1/94      33,750     51,749.65     43,061.72         250           250             0        2.526975      1.800462
 12/1/94      34,000     52,013.31     43,434.17         250           250             0        2.527642      1.805582
12/31/94      34,000     52,263.52     43,574.90           0             0             0        2.539801      1.811432
  1/1/95      34,250     52,513.52     43,824.90         250           250             0        2.539801      1.811432
  2/1/95      34,500     53,473.62     44,233.07         250           250             0        2.574145      1.81797
  3/1/95      34,750     55,486.80     44,630.71         250           250             0        2.659022      1.824038
  4/1/95      35,000     55,736.11     45,042.30         250           250             0        2.658989      1.830642
  5/1/95      35,250     56,993.03     45,460.65         250           250             0        2.707026      1.837484
  6/1/95      35,500     59,988.65     45,878.74         250           250             0        2.837436      1.844278
  7/1/95      35,750     60,559.61     46,285.90         250           250             0        2.852617      1.850596
  8/1/95      36,000     60,250.80     46,707.91         250           250             0        2.826295      1.857473
  9/1/95      36,250     61,856.54     47,090.70         250           250           -30        2.891298      1.863947
 10/1/95      36,500     62,639.42     47,494.63         250           250             0        2.916206      1.87004
 11/1/95      36,750     63,778.59     47,910.99         250           250             0        2.957602      1.87659
 12/1/95      37,000     64,937.53     48,318.82         250           250             0        2.999752      1.882772
12/31/95      37,000     65,744.70     48,480.32           0             0             0        3.037039      1.889065
  1/1/96      37,250     65,994.70     48,730.32         250           250             0        3.037039      1.889065
  2/1/96      37,500     66,386.17     49,141.86         250           250             0        3.043549      1.895327
  3/1/96      37,750     65,634.40     49,535.78         250           250             0        2.997622      1.900878
  4/1/96      38,000     65,126.27     49,936.77         250           250             0        2.962997      1.906672
  5/1/96      38,250     64,668.01     50,332.97         250           250             0        2.930774      1.912254
  6/1/96      38,500     64,858.59     50,729.76         250           250             0        2.928081      1.917831
  7/1/96      38,750     65,981.15     51,134.11         250           250             0        2.967473      1.923666
  8/1/96      39,000     66,950.73     51,541.47         250           250             0        2.999836      1.929586
  9/1/96      39,250     66,530.25     51,917.44         250           250           -30        2.971138      1.935425
 10/1/96      39,500     68,396.04     52,325.86         250           250             0        3.043297      1.941331
 11/1/96      39,750     70,089.61     52,738.37         250           250             0        3.107529      1.94736
 12/1/96      40,000     71,855.18     53,143.22         250           250             0        3.174724      1.953078
12/31/96      40,000     70,935.92     53,307.79           0             0             0        3.134109      1.959126
  1/1/97      40,250     71,185.92     53,557.79         250           250             0        3.134109      1.959126
  2/1/97      40,500     71,731.31     53,977.39         250           250             0        3.147114      1.96533
  3/1/97      40,750     72,332.22     54,381.38         250           250             0        3.16251       1.970937
  4/1/97      41,000     71,536.23     54,807.06         250           250             0        3.116777      1.977304
  5/1/97      41,250     72,669.65     55,228.14         250           250             0        3.155267      1.983476
  6/1/97      41,500     73,616.48     55,657.48         250           250             0        3.185523      1.989917
  7/1/97      41,750     75,209.71     56,090.88         250           250             0        3.243647      1.996474
  8/1/97      42,000     77,278.99     56,527.26         250           250             0        3.322109      2.003108
  9/1/97      42,250     76,883.48     56,934.05         250           250           -30        3.295649      2.009727
 10/1/97      42,500     78,807.23     57,368.53         250           250             0        3.367395      2.016239
 11/1/97      42,750     79,438.51     57,802.76         250           250             0        3.383687      2.022714

<CAPTION> 
               Surrender Values            surrender charge                        free withdrawal amt.

             Bond          Money          Bond        Money                          Bond        Money
            Income         Market        Income       Market                       Income       Market
<S>        <C>            <C>            <C>          <C>           <C>        <C>           <C> 
 7                                                                    4/1/94
 8                                                                    5/1/94
 9                                                                    6/1/94
10                                                                    7/1/94
11                                                                    8/1/94
 0                                                                    9/1/94
 1                                                                   10/1/94
 2                                                                   11/1/94
 3                                                                   12/1/94
 4         51,413.52      42,724.90       840.00       840.00       12/31/94   18263.52      9574.897 
 4                                                                    1/1/95
 5                                                                    2/1/95
 6                                                                    3/1/95
 7                                                                    4/1/95
 8                                                                    5/1/95
 9                                                                    6/1/95
10                                                                    7/1/95
11                                                                    8/1/95
 0                                                                    9/1/95
 1                                                                   10/1/95
 2                                                                   11/1/95
 3                                                                   12/1/95
 4         64,894.70      47,630.32       840.00       840.00       12/31/95   28744.70      11480.32 
 4                                                                    1/1/96
 5                                                                    2/1/96
 6                                                                    3/1/96
 7                                                                    4/1/96
 8                                                                    5/1/96
 9                                                                    6/1/96
10                                                                    7/1/96
11                                                                    8/1/96
 0                                                                    9/1/96
 1                                                                   10/1/96
 2                                                                   11/1/96
 3                                                                   12/1/96
 4         70,085.92      52,457.79       840.00       840.00       12/31/96   30935.92      13307.79 
 4                                                                    1/1/97
 5                                                                    2/1/97
 6                                                                    3/1/97
 7                                                                    4/1/97
 8                                                                    5/1/97
 9                                                                    6/1/97
10                                                                    7/1/97
11                                                                    8/1/97
 0                                                                    9/1/97
 1                                                                   10/1/97
 2                                                                   11/1/97
</TABLE> 
<PAGE>
 
<TABLE> 
<CAPTION> 

 Annual Eff Rate:            8.32%         4.14%                     8.19%         3.95%

 CALCULATION                  $250 Payment per month           Prem tax:               0

                                No Premium Tax
          Cumulative          Bond         Money                       Net
            Payments        Income        Market      Paymts        Paymts           Fee           UV's          UV's
<S>       <C>            <C>           <C>            <C>           <C>              <C>       <C>           <C> 
 12/1/97      43,000     79,977.27     58,246.48         250           250             0       3.395987      2.029493
12/31/97      43,000     80,749.76     58,434.53           0             0             0       3.428788      2.036045

IRR calc (monthly):          0.668%        0.339%      43000

<CAPTION> 
                     Surrender Values            surrender charge                           free withdrawal

                    Bond          Money          Bond        Money                          Bond        Money
                   Income         Market        Income       Market                       Income       Market
       <S>       <C>            <C>             <C>          <C>           <C>       <C>          <C> 
       3                                                                    12/1/97
       4         79,899.76      57,584.53       840.00       840.00        12/31/97     37749.76     15434.53

IRR calc (monthly): 0.658%         0.323%


</TABLE> 
<PAGE>
 
<TABLE> 
<CAPTION> 

amt subject to                                amt subject to                                amt subject to
 surr charge          surrender charge       surrender charge     surrender charge         surrender charge      surrender charge
  12/31/83                                       12/31/84                                      12/31/85
<S>            <C>    <C>             <C>    <C>           <C>    <C>             <C>      <C>           <C>     <C>          <C> 
   250.00      250.00     17.50       17.50    250.00      250.00     15.00       15.00      250.00      250.00     12.50     12.50
   250.00      250.00     17.50       17.50    250.00      250.00     15.00       15.00      250.00      250.00     12.50     12.50
   250.00      250.00     17.50       17.50    250.00      250.00     15.00       15.00      250.00      250.00     12.50     12.50
   237.82      241.10     16.65       16.88    250.00      250.00     15.00       15.00      250.00      250.00     12.50     12.50
     0.00        0.00      0.00        0.00      0.00        0.00      0.00        0.00        0.00        0.00      0.00      0.00
                                               250.00      250.00     17.50       17.50      250.00      250.00     15.00     15.00
                                               250.00      250.00     17.50       17.50      250.00      250.00     15.00     15.00
                                               250.00      250.00     17.50       17.50      250.00      250.00     15.00     15.00
                                               250.00      250.00     17.50       17.50      250.00      250.00     15.00     15.00
                                               250.00      250.00     17.50       17.50      250.00      250.00     15.00     15.00
                                               250.00      250.00     17.50       17.50      250.00      250.00     15.00     15.00
                                               250.00      250.00     17.50       17.50      250.00      250.00     15.00     15.00
                                               250.00      250.00     17.50       17.50      250.00      250.00     15.00     15.00
                                               250.00      250.00     17.50       17.50      250.00      250.00     15.00     15.00
                                               250.00      250.00     17.50       17.50      250.00      250.00     15.00     15.00
                                               250.00      250.00     17.50       17.50      250.00      250.00     15.00     15.00
                                               250.00      143.67     17.50       10.06      250.00      250.00     15.00     15.00
                                                 0.00        0.00      0.00        0.00        0.00        0.00      0.00      0.00
                                                                                             250.00      250.00     17.50     17.50
                                                                                             250.00      250.00     17.50     17.50
                                                                                             250.00      250.00     17.50     17.50
                                                                                             250.00      250.00     17.50     17.50
                                                                                             250.00      250.00     17.50     17.50
                                                                                             250.00      250.00     17.50     17.50
                                                                                             250.00      250.00     17.50     17.50
                                                                                             250.00      250.00     17.50     17.50
                                                                                             250.00      250.00     17.50     17.50
                                                                                             250.00      250.00     17.50     17.50
                                                                                             250.00      250.00     17.50     17.50
                                                                                             250.00      175.12     17.50     12.26
                                                                                               0.00        0.00      0.00      0.00
<CAPTION> 

  amt subject to                                  amt subject to
 surrender charge        surrender charge        surrender charge         surrender charge
    12/31/86                                         12/31/87
<S>             <C>      <C>             <C>     <C>             <C>      <C>            <C> 
    250.00      250.00       10.00       10.00       250.00      250.00        7.50      7.50
    250.00      250.00       10.00       10.00       250.00      250.00        7.50      7.50
    250.00      250.00       10.00       10.00       250.00      250.00        7.50      7.50
    250.00      250.00       10.00       10.00       250.00      250.00        7.50      7.50
      0.00        0.00        0.00        0.00         0.00        0.00        0.00      0.00
    250.00      250.00       12.50       12.50       250.00      250.00       10.00     10.00
    250.00      250.00       12.50       12.50       250.00      250.00       10.00     10.00
    250.00      250.00       12.50       12.50       250.00      250.00       10.00     10.00
    250.00      250.00       12.50       12.50       250.00      250.00       10.00     10.00
    250.00      250.00       12.50       12.50       250.00      250.00       10.00     10.00
    250.00      250.00       12.50       12.50       250.00      250.00       10.00     10.00
    250.00      250.00       12.50       12.50       250.00      250.00       10.00     10.00
    250.00      250.00       12.50       12.50       250.00      250.00       10.00     10.00
    250.00      250.00       12.50       12.50       250.00      250.00       10.00     10.00
    250.00      250.00       12.50       12.50       250.00      250.00       10.00     10.00
    250.00      250.00       12.50       12.50       250.00      250.00       10.00     10.00
    250.00      250.00       12.50       12.50       250.00      250.00       10.00     10.00
      0.00        0.00        0.00        0.00         0.00        0.00        0.00      0.00
    250.00      250.00       15.00       15.00       250.00      250.00       12.50     12.50
    250.00      250.00       15.00       15.00       250.00      250.00       12.50     12.50
    250.00      250.00       15.00       15.00       250.00      250.00       12.50     12.50
    250.00      250.00       15.00       15.00       250.00      250.00       12.50     12.50
    250.00      250.00       15.00       15.00       250.00      250.00       12.50     12.50
    250.00      250.00       15.00       15.00       250.00      250.00       12.50     12.50
    250.00      250.00       15.00       15.00       250.00      250.00       12.50     12.50
    250.00      250.00       15.00       15.00       250.00      250.00       12.50     12.50
    250.00      250.00       15.00       15.00       250.00      250.00       12.50     12.50
    250.00      250.00       15.00       15.00       250.00      250.00       12.50     12.50
    250.00      250.00       15.00       15.00       250.00      250.00       12.50     12.50
    250.00      250.00       15.00       15.00       250.00      250.00       12.50     12.50
      0.00        0.00        0.00        0.00         0.00        0.00        0.00      0.00
    250.00      250.00       17.50       17.50       250.00      250.00       15.00     15.00
    250.00      250.00       17.50       17.50       250.00      250.00       15.00     15.00
    250.00      250.00       17.50       17.50       250.00      250.00       15.00     15.00
    250.00      250.00       17.50       17.50       250.00      250.00       15.00     15.00
    250.00      250.00       17.50       17.50       250.00      250.00       15.00     15.00
    250.00      250.00       17.50       17.50       250.00      250.00       15.00     15.00
    250.00      250.00       17.50       17.50       250.00      250.00       15.00     15.00
    250.00      250.00       17.50       17.50       250.00      250.00       15.00     15.00
    250.00      250.00       17.50       17.50       250.00      250.00       15.00     15.00
    250.00      250.00       17.50       17.50       250.00      250.00       15.00     15.00
    250.00      250.00       17.50       17.50       250.00      250.00       15.00     15.00
    250.00      250.00       17.50       17.50       250.00      250.00       15.00     15.00
      0.00        0.00        0.00        0.00         0.00        0.00        0.00      0.00
                                                     250.00      250.00       17.50     17.50
                                                     250.00      250.00       17.50     17.50
                                                     250.00      250.00       17.50     17.50
                                                     250.00      250.00       17.50     17.50
                                                     250.00      250.00       17.50     17.50
</TABLE>
<PAGE>
 
<TABLE> 
<CAPTION> 

amt subject to                                amt subject to                                amt subject to
<S>                                           <C>                                           <C> 








<CAPTION> 

      amt subject to                                  amt subject to
      <S>                                             <C>           <C>          <C>         <C> 
                                                        250.00      250.00       17.50       17.50
                                                        250.00      250.00       17.50       17.50
                                                        250.00      250.00       17.50       17.50
                                                        250.00      250.00       17.50       17.50
                                                        250.00      250.00       17.50       17.50
                                                        250.00      250.00       17.50       17.50
                                                        250.00      250.00       17.50       17.50
                                                          0.00        0.00        0.00        0.00
</TABLE> 
<PAGE>
 
<TABLE> 
<CAPTION> 
amt subject to                                amt subject to                                amt subject to
<S>                                           <C>                                           <C> 

</TABLE> 

<TABLE> 
<CAPTION> 
  amt subject to                                  amt subject to
  <S>                                             <C> 

</TABLE> 
<PAGE>
 
<TABLE> 
<CAPTION> 
amt subject to                                amt subject to                                amt subject to
<S>         <C>                            <C>         <C>                               <C>         <C>  
69.15       69.38                          270.00      262.56                            440.00      434.76
</TABLE> 

<TABLE> 
<CAPTION> 
amt subject to                                amt subject to  
<S>         <C>                               <C>         <C> 
580.00      580.00                            690.00      690.00
</TABLE> 
<PAGE>
 
<TABLE> 
<CAPTION> 

amt subject to                             amt subject to                                amt subject to
surrender charge       surrender charge    surrender charge      surrender charge        surrender charge      surrender charge
  12/31/88                                  12/31/89                                      12/31/90
<S>          <C>       <C>          <C>    <C>            <C>    <C>              <C>    <C>            <C>    <C>            <C>   
   250.00    250.00      5.00       5.00      250.00      250.00      2.50        2.50                              0.00      0.00
   250.00    250.00      5.00       5.00      250.00      250.00      2.50        2.50                              0.00      0.00
   250.00    250.00      5.00       5.00      250.00      250.00      2.50        2.50                              0.00      0.00
   250.00    250.00      5.00       5.00      250.00      250.00      2.50        2.50                              0.00      0.00
     0.00      0.00      0.00       0.00        0.00        0.00      0.00        0.00        0.00        0.00      0.00      0.00
   250.00    250.00      7.50       7.50      250.00      250.00      5.00        5.00      250.00      250.00      2.50      2.50
   250.00    250.00      7.50       7.50      250.00      250.00      5.00        5.00      250.00      250.00      2.50      2.50
   250.00    250.00      7.50       7.50      250.00      250.00      5.00        5.00      250.00      250.00      2.50      2.50
   250.00    250.00      7.50       7.50      250.00      250.00      5.00        5.00      250.00      250.00      2.50      2.50
   250.00    250.00      7.50       7.50      250.00      250.00      5.00        5.00      250.00      250.00      2.50      2.50
   250.00    250.00      7.50       7.50      250.00      250.00      5.00        5.00      250.00      250.00      2.50      2.50
   250.00    250.00      7.50       7.50      250.00      250.00      5.00        5.00      250.00      250.00      2.50      2.50
   250.00    250.00      7.50       7.50      250.00      250.00      5.00        5.00      250.00      250.00      2.50      2.50
   250.00    250.00      7.50       7.50      250.00      250.00      5.00        5.00      250.00      250.00      2.50      2.50
   250.00    250.00      7.50       7.50      250.00      250.00      5.00        5.00      250.00      250.00      2.50      2.50
   250.00    250.00      7.50       7.50      250.00      250.00      5.00        5.00      250.00      250.00      2.50      2.50
   250.00    250.00      7.50       7.50      250.00      250.00      5.00        5.00      250.00      250.00      2.50      2.50
     0.00      0.00      0.00       0.00        0.00        0.00      0.00        0.00        0.00        0.00      0.00      0.00
   250.00    250.00     10.00      10.00      250.00      250.00      7.50        7.50      250.00      250.00      5.00      5.00
   250.00    250.00     10.00      10.00      250.00      250.00      7.50        7.50      250.00      250.00      5.00      5.00
   250.00    250.00     10.00      10.00      250.00      250.00      7.50        7.50      250.00      250.00      5.00      5.00
   250.00    250.00     10.00      10.00      250.00      250.00      7.50        7.50      250.00      250.00      5.00      5.00
   250.00    250.00     10.00      10.00      250.00      250.00      7.50        7.50      250.00      250.00      5.00      5.00
   250.00    250.00     10.00      10.00      250.00      250.00      7.50        7.50      250.00      250.00      5.00      5.00
   250.00    250.00     10.00      10.00      250.00      250.00      7.50        7.50      250.00      250.00      5.00      5.00
   250.00    250.00     10.00      10.00      250.00      250.00      7.50        7.50      250.00      250.00      5.00      5.00
   250.00    250.00     10.00      10.00      250.00      250.00      7.50        7.50      250.00      250.00      5.00      5.00
   250.00    250.00     10.00      10.00      250.00      250.00      7.50        7.50      250.00      250.00      5.00      5.00
   250.00    250.00     10.00      10.00      250.00      250.00      7.50        7.50      250.00      250.00      5.00      5.00
   250.00    250.00     10.00      10.00      250.00      250.00      7.50        7.50      250.00      250.00      5.00      5.00
     0.00      0.00      0.00       0.00        0.00        0.00      0.00        0.00        0.00        0.00      0.00      0.00
   250.00    250.00     12.50      12.50      250.00      250.00     10.00       10.00      250.00      250.00      7.50      7.50
   250.00    250.00     12.50      12.50      250.00      250.00     10.00       10.00      250.00      250.00      7.50      7.50
   250.00    250.00     12.50      12.50      250.00      250.00     10.00       10.00      250.00      250.00      7.50      7.50
   250.00    250.00     12.50      12.50      250.00      250.00     10.00       10.00      250.00      250.00      7.50      7.50
   250.00    250.00     12.50      12.50      250.00      250.00     10.00       10.00      250.00      250.00      7.50      7.50
   250.00    250.00     12.50      12.50      250.00      250.00     10.00       10.00      250.00      250.00      7.50      7.50
   250.00    250.00     12.50      12.50      250.00      250.00     10.00       10.00      250.00      250.00      7.50      7.50
   250.00    250.00     12.50      12.50      250.00      250.00     10.00       10.00      250.00      250.00      7.50      7.50
   250.00    250.00     12.50      12.50      250.00      250.00     10.00       10.00      250.00      250.00      7.50      7.50
   250.00    250.00     12.50      12.50      250.00      250.00     10.00       10.00      250.00      250.00      7.50      7.50
   250.00    250.00     12.50      12.50      250.00      250.00     10.00       10.00      250.00      250.00      7.50      7.50
   250.00    250.00     12.50      12.50      250.00      250.00     10.00       10.00      250.00      250.00      7.50      7.50
     0.00      0.00      0.00       0.00        0.00        0.00      0.00        0.00        0.00        0.00      0.00      0.00
   250.00    250.00     15.00      15.00      250.00      250.00     12.50       12.50      250.00      250.00     10.00     10.00
   250.00    250.00     15.00      15.00      250.00      250.00     12.50       12.50      250.00      250.00     10.00     10.00
   250.00    250.00     15.00      15.00      250.00      250.00     12.50       12.50      250.00      250.00     10.00     10.00
   250.00    250.00     15.00      15.00      250.00      250.00     12.50       12.50      250.00      250.00     10.00     10.00
   250.00    250.00     15.00      15.00      250.00      250.00     12.50       12.50      250.00      250.00     10.00     10.00

<CAPTION> 

amt subject to                                   amt subject to
surrender charge        surrender charge         surrender charge        surrender charge
 12/31/91                                         12/31/92
<S>            <C>      <C>             <C>      <C>          <C>        <C>            <C> 
                            0.00        0.00                                0.00        0.00
                            0.00        0.00                                0.00        0.00
                            0.00        0.00                                0.00        0.00
                            0.00        0.00                                0.00        0.00
                            0.00        0.00                                0.00        0.00
                            0.00        0.00                                0.00        0.00
                            0.00        0.00                                0.00        0.00
                            0.00        0.00                                0.00        0.00
                            0.00        0.00                                0.00        0.00
                            0.00        0.00                                0.00        0.00
                            0.00        0.00                                0.00        0.00
                            0.00        0.00                                0.00        0.00
                            0.00        0.00                                0.00        0.00
                            0.00        0.00                                0.00        0.00
                            0.00        0.00                                0.00        0.00
                            0.00        0.00                                0.00        0.00
                            0.00        0.00                                0.00        0.00
     0.00        0.00       0.00        0.00                                0.00        0.00
   250.00      250.00       2.50        2.50                                0.00        0.00
   250.00      250.00       2.50        2.50                                0.00        0.00
   250.00      250.00       2.50        2.50                                0.00        0.00
   250.00      250.00       2.50        2.50                                0.00        0.00
   250.00      250.00       2.50        2.50                                0.00        0.00
   250.00      250.00       2.50        2.50                                0.00        0.00
   250.00      250.00       2.50        2.50                                0.00        0.00
   250.00      250.00       2.50        2.50                                0.00        0.00
   250.00      250.00       2.50        2.50                                0.00        0.00
   250.00      250.00       2.50        2.50                                0.00        0.00
   250.00      250.00       2.50        2.50                                0.00        0.00
   250.00      250.00       2.50        2.50                                0.00        0.00
     0.00        0.00       0.00        0.00        0.00        0.00        0.00        0.00
   250.00      250.00       5.00        5.00      250.00      250.00        2.50        2.50
   250.00      250.00       5.00        5.00      250.00      250.00        2.50        2.50
   250.00      250.00       5.00        5.00      250.00      250.00        2.50        2.50
   250.00      250.00       5.00        5.00      250.00      250.00        2.50        2.50
   250.00      250.00       5.00        5.00      250.00      250.00        2.50        2.50
   250.00      250.00       5.00        5.00      250.00      250.00        2.50        2.50
   250.00      250.00       5.00        5.00      250.00      250.00        2.50        2.50
   250.00      250.00       5.00        5.00      250.00      250.00        2.50        2.50
   250.00      250.00       5.00        5.00      250.00      250.00        2.50        2.50
   250.00      250.00       5.00        5.00      250.00      250.00        2.50        2.50
   250.00      250.00       5.00        5.00      250.00      250.00        2.50        2.50
   250.00      250.00       5.00        5.00      250.00      250.00        2.50        2.50
     0.00        0.00       0.00        0.00        0.00        0.00        0.00        0.00
   250.00      250.00       7.50        7.50      250.00      250.00        5.00        5.00
   250.00      250.00       7.50        7.50      250.00      250.00        5.00        5.00
   250.00      250.00       7.50        7.50      250.00      250.00        5.00        5.00
   250.00      250.00       7.50        7.50      250.00      250.00        5.00        5.00
   250.00      250.00       7.50        7.50      250.00      250.00        5.00        5.00
</TABLE> 


<PAGE>
 
<TABLE> 
<CAPTION> 

amt subject to                             amt subject to                                amt subject to
surrender charge       surrender charge    surrender charge      surrender charge        surrender charge      surrender charge
  12/31/88                                  12/31/89                                      12/31/90
<S>          <C>       <C>         <C>     <C>            <C>    <C>             <C>     <C>            <C>    <C>           <C>  
   250.00    250.00     15.00      15.00      250.00      250.00     12.50       12.50      250.00      250.00     10.00     10.00
   250.00    250.00     15.00      15.00      250.00      250.00     12.50       12.50      250.00      250.00     10.00     10.00
   250.00    250.00     15.00      15.00      250.00      250.00     12.50       12.50      250.00      250.00     10.00     10.00
   250.00    250.00     15.00      15.00      250.00      250.00     12.50       12.50      250.00      250.00     10.00     10.00
   250.00    250.00     15.00      15.00      250.00      250.00     12.50       12.50      250.00      250.00     10.00     10.00
   250.00    250.00     15.00      15.00      250.00      250.00     12.50       12.50      250.00      250.00     10.00     10.00
   250.00    250.00     15.00      15.00      250.00      250.00     12.50       12.50      250.00      250.00     10.00     10.00
     0.00      0.00      0.00       0.00        0.00        0.00      0.00        0.00        0.00        0.00      0.00      0.00
   250.00    250.00     17.50      17.50      250.00      250.00     15.00       15.00      250.00      250.00     12.50     12.50
   250.00    250.00     17.50      17.50      250.00      250.00     15.00       15.00      250.00      250.00     12.50     12.50
   250.00    250.00     17.50      17.50      250.00      250.00     15.00       15.00      250.00      250.00     12.50     12.50
   250.00    250.00     17.50      17.50      250.00      250.00     15.00       15.00      250.00      250.00     12.50     12.50
   250.00    250.00     17.50      17.50      250.00      250.00     15.00       15.00      250.00      250.00     12.50     12.50
   250.00    250.00     17.50      17.50      250.00      250.00     15.00       15.00      250.00      250.00     12.50     12.50
   250.00    250.00     17.50      17.50      250.00      250.00     15.00       15.00      250.00      250.00     12.50     12.50
   250.00    250.00     17.50      17.50      250.00      250.00     15.00       15.00      250.00      250.00     12.50     12.50
   250.00    250.00     17.50      17.50      250.00      250.00     15.00       15.00      250.00      250.00     12.50     12.50
   250.00    250.00     17.50      17.50      250.00      250.00     15.00       15.00      250.00      250.00     12.50     12.50
   250.00    250.00     17.50      17.50      250.00      250.00     15.00       15.00      250.00      250.00     12.50     12.50
   250.00    250.00     17.50      17.50      250.00      250.00     15.00       15.00      250.00      250.00     12.50     12.50
     0.00      0.00      0.00       0.00        0.00        0.00      0.00        0.00        0.00        0.00      0.00      0.00
                                              250.00      250.00     17.50       17.50      250.00      250.00     15.00     15.00
                                              250.00      250.00     17.50       17.50      250.00      250.00     15.00     15.00
                                              250.00      250.00     17.50       17.50      250.00      250.00     15.00     15.00
                                              250.00      250.00     17.50       17.50      250.00      250.00     15.00     15.00
                                              250.00      250.00     17.50       17.50      250.00      250.00     15.00     15.00
                                              250.00      250.00     17.50       17.50      250.00      250.00     15.00     15.00
                                              250.00      250.00     17.50       17.50      250.00      250.00     15.00     15.00
                                              250.00      250.00     17.50       17.50      250.00      250.00     15.00     15.00
                                              250.00      250.00     17.50       17.50      250.00      250.00     15.00     15.00
                                              250.00      250.00     17.50       17.50      250.00      250.00     15.00     15.00
                                              250.00      250.00     17.50       17.50      250.00      250.00     15.00     15.00
                                              250.00      250.00     17.50       17.50      250.00      250.00     15.00     15.00
                                                0.00        0.00      0.00        0.00        0.00        0.00      0.00      0.00
                                                                                            250.00      250.00     17.50     17.50
                                                                                            250.00      250.00     17.50     17.50
                                                                                            250.00      250.00     17.50     17.50
                                                                                            250.00      250.00     17.50     17.50
                                                                                            250.00      250.00     17.50     17.50
                                                                                            250.00      250.00     17.50     17.50
                                                                                            250.00      250.00     17.50     17.50
                                                                                            250.00      250.00     17.50     17.50
                                                                                            250.00      250.00     17.50     17.50
                                                                                            250.00      250.00     17.50     17.50
                                                                                            250.00      250.00     17.50     17.50
                                                                                            250.00      250.00     17.50     17.50
                                                                                              0.00        0.00      0.00      0.00

<CAPTION> 

amt subject to                                   amt subject to
surrender charge        surrender charge         surrender charge        surrender charge
 12/31/91                                         12/31/92
<S>            <C>      <C>              <C>     <C>            <C>      <C>           <C>   
   250.00      250.00         7.50        7.50      250.00      250.00        5.00      5.00
   250.00      250.00         7.50        7.50      250.00      250.00        5.00      5.00
   250.00      250.00         7.50        7.50      250.00      250.00        5.00      5.00
   250.00      250.00         7.50        7.50      250.00      250.00        5.00      5.00
   250.00      250.00         7.50        7.50      250.00      250.00        5.00      5.00
   250.00      250.00         7.50        7.50      250.00      250.00        5.00      5.00
   250.00      250.00         7.50        7.50      250.00      250.00        5.00      5.00
     0.00        0.00         0.00        0.00        0.00        0.00        0.00      0.00
   250.00      250.00        10.00       10.00      250.00      250.00        7.50      7.50
   250.00      250.00        10.00       10.00      250.00      250.00        7.50      7.50
   250.00      250.00        10.00       10.00      250.00      250.00        7.50      7.50
   250.00      250.00        10.00       10.00      250.00      250.00        7.50      7.50
   250.00      250.00        10.00       10.00      250.00      250.00        7.50      7.50
   250.00      250.00        10.00       10.00      250.00      250.00        7.50      7.50
   250.00      250.00        10.00       10.00      250.00      250.00        7.50      7.50
   250.00      250.00        10.00       10.00      250.00      250.00        7.50      7.50
   250.00      250.00        10.00       10.00      250.00      250.00        7.50      7.50
   250.00      250.00        10.00       10.00      250.00      250.00        7.50      7.50
   250.00      250.00        10.00       10.00      250.00      250.00        7.50      7.50
   250.00      250.00        10.00       10.00      250.00      250.00        7.50      7.50
     0.00        0.00         0.00        0.00        0.00        0.00        0.00      0.00
   250.00      250.00        12.50       12.50      250.00      250.00       10.00     10.00
   250.00      250.00        12.50       12.50      250.00      250.00       10.00     10.00
   250.00      250.00        12.50       12.50      250.00      250.00       10.00     10.00
   250.00      250.00        12.50       12.50      250.00      250.00       10.00     10.00
   250.00      250.00        12.50       12.50      250.00      250.00       10.00     10.00
   250.00      250.00        12.50       12.50      250.00      250.00       10.00     10.00
   250.00      250.00        12.50       12.50      250.00      250.00       10.00     10.00
   250.00      250.00        12.50       12.50      250.00      250.00       10.00     10.00
   250.00      250.00        12.50       12.50      250.00      250.00       10.00     10.00
   250.00      250.00        12.50       12.50      250.00      250.00       10.00     10.00
   250.00      250.00        12.50       12.50      250.00      250.00       10.00     10.00
   250.00      250.00        12.50       12.50      250.00      250.00       10.00     10.00
     0.00        0.00         0.00        0.00        0.00        0.00        0.00      0.00
   250.00      250.00        15.00       15.00      250.00      250.00       12.50     12.50
   250.00      250.00        15.00       15.00      250.00      250.00       12.50     12.50
   250.00      250.00        15.00       15.00      250.00      250.00       12.50     12.50
   250.00      250.00        15.00       15.00      250.00      250.00       12.50     12.50
   250.00      250.00        15.00       15.00      250.00      250.00       12.50     12.50
   250.00      250.00        15.00       15.00      250.00      250.00       12.50     12.50
   250.00      250.00        15.00       15.00      250.00      250.00       12.50     12.50
   250.00      250.00        15.00       15.00      250.00      250.00       12.50     12.50
   250.00      250.00        15.00       15.00      250.00      250.00       12.50     12.50
   250.00      250.00        15.00       15.00      250.00      250.00       12.50     12.50
   250.00      250.00        15.00       15.00      250.00      250.00       12.50     12.50
   250.00      250.00        15.00       15.00      250.00      250.00       12.50     12.50
     0.00        0.00         0.00        0.00        0.00        0.00        0.00      0.00
   250.00      250.00        17.50       17.50      250.00      250.00       15.00     15.00
   250.00      250.00        17.50       17.50      250.00      250.00       15.00     15.00
   250.00      250.00        17.50       17.50      250.00      250.00       15.00     15.00
   250.00      250.00        17.50       17.50      250.00      250.00       15.00     15.00
   250.00      250.00        17.50       17.50      250.00      250.00       15.00     15.00
</TABLE> 

<PAGE>
 
<TABLE> 
<CAPTION> 

amt subject to                             amt subject to                                amt subject to
surrender charge       surrender charge    surrender charge      surrender charge        surrender charge      surrender charge
  12/31/88                                  12/31/89                                      12/31/90
<S>                    <C>                 <C>                   <C>                     <C>                   <C>  



<CAPTION> 

amt subject to                                   amt subject to
surrender charge        surrender charge         surrender charge        surrender charge
 12/31/91                                         12/31/92
<S>            <C>      <C>              <C>     <C>            <C>      <C>             <C> 
   250.00      250.00        17.50       17.50      250.00      250.00       15.00       15.00
   250.00      250.00        17.50       17.50      250.00      250.00       15.00       15.00
   250.00      250.00        17.50       17.50      250.00      250.00       15.00       15.00
   250.00      250.00        17.50       17.50      250.00      250.00       15.00       15.00
   250.00      250.00        17.50       17.50      250.00      250.00       15.00       15.00
   250.00      250.00        17.50       17.50      250.00      250.00       15.00       15.00
   250.00      250.00        17.50       17.50      250.00      250.00       15.00       15.00
     0.00        0.00         0.00        0.00        0.00        0.00        0.00        0.00
                                                    250.00      250.00       17.50       17.50
                                                    250.00      250.00       17.50       17.50
                                                    250.00      250.00       17.50       17.50
                                                    250.00      250.00       17.50       17.50
                                                    250.00      250.00       17.50       17.50
                                                    250.00      250.00       17.50       17.50
                                                    250.00      250.00       17.50       17.50
                                                    250.00      250.00       17.50       17.50
                                                    250.00      250.00       17.50       17.50
                                                    250.00      250.00       17.50       17.50
                                                    250.00      250.00       17.50       17.50
                                                    250.00      250.00       17.50       17.50
                                                      0.00        0.00        0.00        0.00
</TABLE> 

<PAGE>
 
<TABLE> 
<CAPTION> 

amt subject to                             amt subject to                                amt subject to
surrender charge       surrender charge    surrender charge      surrender charge        surrender charge      surrender charge
  12/31/88                                  12/31/89                                      12/31/90
<S>                    <C>                 <C>                   <C>                     <C>                   <C> 












                       770.00     770.00                            820.00      820.00                            840.00    840.00

<CAPTION> 

amt subject to                                   amt subject to
surrender charge        surrender charge         surrender charge        surrender charge
 12/31/91                                         12/31/92
<S>                     <C>                      <C>                     <C> 











                            840.00      840.00                              840.00      840.00
</TABLE> 

<PAGE>
 
<TABLE> 
<CAPTION> 
 amt subject to                                  amt subject to                                amt subject to
surrender charge       surrender charge         surrender charge      surrender charge        surrender charge      surrender charge
    12/31/93                                        12/31/94                                      12/31/95
<S>                    <C>                      <C>                   <C>                     <C>                   <C> 
                           0.00       0.00                              0.00       0.00                               0.00      0.00
                           0.00       0.00                              0.00       0.00                               0.00      0.00
                           0.00       0.00                              0.00       0.00                               0.00      0.00
                           0.00       0.00                              0.00       0.00                               0.00      0.00
                           0.00       0.00                              0.00       0.00                               0.00      0.00
                           0.00       0.00                              0.00       0.00                               0.00      0.00
                           0.00       0.00                              0.00       0.00                               0.00      0.00
                           0.00       0.00                              0.00       0.00                               0.00      0.00
                           0.00       0.00                              0.00       0.00                               0.00      0.00
                           0.00       0.00                              0.00       0.00                               0.00      0.00
                           0.00       0.00                              0.00       0.00                               0.00      0.00
                           0.00       0.00                              0.00       0.00                               0.00      0.00
                           0.00       0.00                              0.00       0.00                               0.00      0.00
                           0.00       0.00                              0.00       0.00                               0.00      0.00
                           0.00       0.00                              0.00       0.00                               0.00      0.00
                           0.00       0.00                              0.00       0.00                               0.00      0.00
                           0.00       0.00                              0.00       0.00                               0.00      0.00
                           0.00       0.00                              0.00       0.00                               0.00      0.00
                           0.00       0.00                              0.00       0.00                               0.00      0.00
                           0.00       0.00                              0.00       0.00                               0.00      0.00
                           0.00       0.00                              0.00       0.00                               0.00      0.00
                           0.00       0.00                              0.00       0.00                               0.00      0.00
                           0.00       0.00                              0.00       0.00                               0.00      0.00
                           0.00       0.00                              0.00       0.00                               0.00      0.00
                           0.00       0.00                              0.00       0.00                               0.00      0.00
                           0.00       0.00                              0.00       0.00                               0.00      0.00
                           0.00       0.00                              0.00       0.00                               0.00      0.00
                           0.00       0.00                              0.00       0.00                               0.00      0.00
                           0.00       0.00                              0.00       0.00                               0.00      0.00
                           0.00       0.00                              0.00       0.00                               0.00      0.00
                           0.00       0.00                              0.00       0.00                               0.00      0.00
                           0.00       0.00                              0.00       0.00                               0.00      0.00
                           0.00       0.00                              0.00       0.00                               0.00      0.00
                           0.00       0.00                              0.00       0.00                               0.00      0.00
                           0.00       0.00                              0.00       0.00                               0.00      0.00
                           0.00       0.00                              0.00       0.00                               0.00      0.00
                           0.00       0.00                              0.00       0.00                               0.00      0.00
                           0.00       0.00                              0.00       0.00                               0.00      0.00
                           0.00       0.00                              0.00       0.00                               0.00      0.00
                           0.00       0.00                              0.00       0.00                               0.00      0.00
                           0.00       0.00                              0.00       0.00                               0.00      0.00
                           0.00       0.00                              0.00       0.00                               0.00      0.00
                           0.00       0.00                              0.00       0.00                               0.00      0.00
     0.00        0.00      0.00       0.00                              0.00       0.00                               0.00      0.00
   250.00      250.00      2.50       2.50                              0.00       0.00                               0.00      0.00
   250.00      250.00      2.50       2.50                              0.00       0.00                               0.00      0.00
   250.00      250.00      2.50       2.50                              0.00       0.00                               0.00      0.00
   250.00      250.00      2.50       2.50                              0.00       0.00                               0.00      0.00
   250.00      250.00      2.50       2.50                              0.00       0.00                               0.00      0.00
</TABLE> 

<TABLE> 
<CAPTION> 
 amt subject to                                   amt subject to
surrender charge        surrender charge         surrender charge        surrender charge
    12/31/96                                         12/31/97
<S>                     <C>           <C>        <C>                     <C>            <C> 
                          0.00        0.00                                  0.00        0.00
                          0.00        0.00                                  0.00        0.00
                          0.00        0.00                                  0.00        0.00
                          0.00        0.00                                  0.00        0.00
                          0.00        0.00                                  0.00        0.00
                          0.00        0.00                                  0.00        0.00
                          0.00        0.00                                  0.00        0.00
                          0.00        0.00                                  0.00        0.00
                          0.00        0.00                                  0.00        0.00
                          0.00        0.00                                  0.00        0.00
                          0.00        0.00                                  0.00        0.00
                          0.00        0.00                                  0.00        0.00
                          0.00        0.00                                  0.00        0.00
                          0.00        0.00                                  0.00        0.00
                          0.00        0.00                                  0.00        0.00
                          0.00        0.00                                  0.00        0.00
                          0.00        0.00                                  0.00        0.00
                          0.00        0.00                                  0.00        0.00
                          0.00        0.00                                  0.00        0.00
                          0.00        0.00                                  0.00        0.00
                          0.00        0.00                                  0.00        0.00
                          0.00        0.00                                  0.00        0.00
                          0.00        0.00                                  0.00        0.00
                          0.00        0.00                                  0.00        0.00
                          0.00        0.00                                  0.00        0.00
                          0.00        0.00                                  0.00        0.00
                          0.00        0.00                                  0.00        0.00
                          0.00        0.00                                  0.00        0.00
                          0.00        0.00                                  0.00        0.00
                          0.00        0.00                                  0.00        0.00
                          0.00        0.00                                  0.00        0.00
                          0.00        0.00                                  0.00        0.00
                          0.00        0.00                                  0.00        0.00
                          0.00        0.00                                  0.00        0.00
                          0.00        0.00                                  0.00        0.00
                          0.00        0.00                                  0.00        0.00
                          0.00        0.00                                  0.00        0.00
                          0.00        0.00                                  0.00        0.00
                          0.00        0.00                                  0.00        0.00
                          0.00        0.00                                  0.00        0.00
                          0.00        0.00                                  0.00        0.00
                          0.00        0.00                                  0.00        0.00
                          0.00        0.00                                  0.00        0.00
                          0.00        0.00                                  0.00        0.00
                          0.00        0.00                                  0.00        0.00
                          0.00        0.00                                  0.00        0.00
                          0.00        0.00                                  0.00        0.00
                          0.00        0.00                                  0.00        0.00
                          0.00        0.00                                  0.00        0.00
</TABLE> 
<PAGE>
 
<TABLE> 
<CAPTION> 
 amt subject to                                  amt subject to                                amt subject to
surrender charge       surrender charge         surrender charge      surrender charge        surrender charge      surrender charge
    12/31/93                                       12/31/94                                       12/31/95
<S>            <C>     <C>            <C>       <C>         <C>       <C>          <C>        <C>                   <C>        <C> 
   250.00      250.00      2.50       2.50                              0.00       0.00                              0.00      0.00 
   250.00      250.00      2.50       2.50                              0.00       0.00                              0.00      0.00
   250.00      250.00      2.50       2.50                              0.00       0.00                              0.00      0.00
   250.00      250.00      2.50       2.50                              0.00       0.00                              0.00      0.00
   250.00      250.00      2.50       2.50                              0.00       0.00                              0.00      0.00
   250.00      250.00      2.50       2.50                              0.00       0.00                              0.00      0.00
   250.00      250.00      2.50       2.50                              0.00       0.00                              0.00      0.00
     0.00        0.00      0.00       0.00        0.00        0.00      0.00       0.00                              0.00      0.00
   250.00      250.00      5.00       5.00      250.00      250.00      2.50       2.50                              0.00      0.00
   250.00      250.00      5.00       5.00      250.00      250.00      2.50       2.50                              0.00      0.00
   250.00      250.00      5.00       5.00      250.00      250.00      2.50       2.50                              0.00      0.00
   250.00      250.00      5.00       5.00      250.00      250.00      2.50       2.50                              0.00      0.00
   250.00      250.00      5.00       5.00      250.00      250.00      2.50       2.50                              0.00      0.00
   250.00      250.00      5.00       5.00      250.00      250.00      2.50       2.50                              0.00      0.00
   250.00      250.00      5.00       5.00      250.00      250.00      2.50       2.50                              0.00      0.00
   250.00      250.00      5.00       5.00      250.00      250.00      2.50       2.50                              0.00      0.00
   250.00      250.00      5.00       5.00      250.00      250.00      2.50       2.50                              0.00      0.00
   250.00      250.00      5.00       5.00      250.00      250.00      2.50       2.50                              0.00      0.00
   250.00      250.00      5.00       5.00      250.00      250.00      2.50       2.50                              0.00      0.00
   250.00      250.00      5.00       5.00      250.00      250.00      2.50       2.50                              0.00      0.00
     0.00        0.00      0.00       0.00        0.00        0.00      0.00       0.00        0.00        0.00      0.00      0.00
   250.00      250.00      7.50       7.50      250.00      250.00      5.00       5.00      250.00      250.00      2.50      2.50
   250.00      250.00      7.50       7.50      250.00      250.00      5.00       5.00      250.00      250.00      2.50      2.50
   250.00      250.00      7.50       7.50      250.00      250.00      5.00       5.00      250.00      250.00      2.50      2.50
   250.00      250.00      7.50       7.50      250.00      250.00      5.00       5.00      250.00      250.00      2.50      2.50
   250.00      250.00      7.50       7.50      250.00      250.00      5.00       5.00      250.00      250.00      2.50      2.50
   250.00      250.00      7.50       7.50      250.00      250.00      5.00       5.00      250.00      250.00      2.50      2.50
   250.00      250.00      7.50       7.50      250.00      250.00      5.00       5.00      250.00      250.00      2.50      2.50
   250.00      250.00      7.50       7.50      250.00      250.00      5.00       5.00      250.00      250.00      2.50      2.50
   250.00      250.00      7.50       7.50      250.00      250.00      5.00       5.00      250.00      250.00      2.50      2.50
   250.00      250.00      7.50       7.50      250.00      250.00      5.00       5.00      250.00      250.00      2.50      2.50
   250.00      250.00      7.50       7.50      250.00      250.00      5.00       5.00      250.00      250.00      2.50      2.50
   250.00      250.00      7.50       7.50      250.00      250.00      5.00       5.00      250.00      250.00      2.50      2.50
     0.00        0.00      0.00       0.00        0.00        0.00      0.00       0.00        0.00        0.00      0.00      0.00
   250.00      250.00     10.00      10.00      250.00      250.00      7.50       7.50      250.00      250.00      5.00      5.00
   250.00      250.00     10.00      10.00      250.00      250.00      7.50       7.50      250.00      250.00      5.00      5.00
   250.00      250.00     10.00      10.00      250.00      250.00      7.50       7.50      250.00      250.00      5.00      5.00
   250.00      250.00     10.00      10.00      250.00      250.00      7.50       7.50      250.00      250.00      5.00      5.00
   250.00      250.00     10.00      10.00      250.00      250.00      7.50       7.50      250.00      250.00      5.00      5.00
   250.00      250.00     10.00      10.00      250.00      250.00      7.50       7.50      250.00      250.00      5.00      5.00
   250.00      250.00     10.00      10.00      250.00      250.00      7.50       7.50      250.00      250.00      5.00      5.00
   250.00      250.00     10.00      10.00      250.00      250.00      7.50       7.50      250.00      250.00      5.00      5.00
   250.00      250.00     10.00      10.00      250.00      250.00      7.50       7.50      250.00      250.00      5.00      5.00
   250.00      250.00     10.00      10.00      250.00      250.00      7.50       7.50      250.00      250.00      5.00      5.00
   250.00      250.00     10.00      10.00      250.00      250.00      7.50       7.50      250.00      250.00      5.00      5.00
   250.00      250.00     10.00      10.00      250.00      250.00      7.50       7.50      250.00      250.00      5.00      5.00
     0.00        0.00      0.00       0.00        0.00        0.00      0.00       0.00        0.00        0.00      0.00      0.00
   250.00      250.00     12.50      12.50      250.00      250.00     10.00      10.00      250.00      250.00      7.50      7.50
   250.00      250.00     12.50      12.50      250.00      250.00     10.00      10.00      250.00      250.00      7.50      7.50
   250.00      250.00     12.50      12.50      250.00      250.00     10.00      10.00      250.00      250.00      7.50      7.50
   250.00      250.00     12.50      12.50      250.00      250.00     10.00      10.00      250.00      250.00      7.50      7.50
   250.00      250.00     12.50      12.50      250.00      250.00     10.00      10.00      250.00      250.00      7.50      7.50
</TABLE> 

<TABLE> 
<CAPTION> 
    amt subject to                                   amt subject to
   surrender charge        surrender charge         surrender charge        surrender charge
      12/31/96                                          12/31/97
<S>                        <C>           <C>        <C>                     <C>          <C> 
                             0.00        0.00                                0.00        0.00
                             0.00        0.00                                0.00        0.00
                             0.00        0.00                                0.00        0.00
                             0.00        0.00                                0.00        0.00
                             0.00        0.00                                0.00        0.00
                             0.00        0.00                                0.00        0.00
                             0.00        0.00                                0.00        0.00
                             0.00        0.00                                0.00        0.00
                             0.00        0.00                                0.00        0.00
                             0.00        0.00                                0.00        0.00
                             0.00        0.00                                0.00        0.00
                             0.00        0.00                                0.00        0.00
                             0.00        0.00                                0.00        0.00
                             0.00        0.00                                0.00        0.00
                             0.00        0.00                                0.00        0.00
                             0.00        0.00                                0.00        0.00
                             0.00        0.00                                0.00        0.00
                             0.00        0.00                                0.00        0.00
                             0.00        0.00                                0.00        0.00
                             0.00        0.00                                0.00        0.00
                             0.00        0.00                                0.00        0.00
                             0.00        0.00                                0.00        0.00
                             0.00        0.00                                0.00        0.00
                             0.00        0.00                                0.00        0.00
                             0.00        0.00                                0.00        0.00
                             0.00        0.00                                0.00        0.00
                             0.00        0.00                                0.00        0.00
                             0.00        0.00                                0.00        0.00
                             0.00        0.00                                0.00        0.00
                             0.00        0.00                                0.00        0.00
                             0.00        0.00                                0.00        0.00
                             0.00        0.00                                0.00        0.00
                             0.00        0.00                                0.00        0.00
    0.00        0.00         0.00        0.00                                0.00        0.00
  250.00      250.00         2.50        2.50                                0.00        0.00
  250.00      250.00         2.50        2.50                                0.00        0.00
  250.00      250.00         2.50        2.50                                0.00        0.00
  250.00      250.00         2.50        2.50                                0.00        0.00
  250.00      250.00         2.50        2.50                                0.00        0.00
  250.00      250.00         2.50        2.50                                0.00        0.00
  250.00      250.00         2.50        2.50                                0.00        0.00
  250.00      250.00         2.50        2.50                                0.00        0.00
  250.00      250.00         2.50        2.50                                0.00        0.00
  250.00      250.00         2.50        2.50                                0.00        0.00
  250.00      250.00         2.50        2.50                                0.00        0.00
  250.00      250.00         2.50        2.50                                0.00        0.00
    0.00        0.00         0.00        0.00        0.00        0.00        0.00        0.00
  250.00      250.00         5.00        5.00      250.00      250.00        2.50        2.50
  250.00      250.00         5.00        5.00      250.00      250.00        2.50        2.50
  250.00      250.00         5.00        5.00      250.00      250.00        2.50        2.50
  250.00      250.00         5.00        5.00      250.00      250.00        2.50        2.50
  250.00      250.00         5.00        5.00      250.00      250.00        2.50        2.50
</TABLE> 
<PAGE>
 
<TABLE> 
<CAPTION> 

amt subject to                                  amt subject to                                amt subject to
surrender charge       surrender charge         surrender charge      surrender charge        surrender charge      surrender charge
    12/31/93                                       12/31/94                                      12/31/95
<S>            <C>     <C>           <C>        <C>         <C>       <C>         <C>        <C>         <C>        <C>        <C> 
   250.00      250.00     12.50      12.50      250.00      250.00     10.00      10.00      250.00      250.00      7.50      7.50
   250.00      250.00     12.50      12.50      250.00      250.00     10.00      10.00      250.00      250.00      7.50      7.50
   250.00      250.00     12.50      12.50      250.00      250.00     10.00      10.00      250.00      250.00      7.50      7.50
   250.00      250.00     12.50      12.50      250.00      250.00     10.00      10.00      250.00      250.00      7.50      7.50
   250.00      250.00     12.50      12.50      250.00      250.00     10.00      10.00      250.00      250.00      7.50      7.50
   250.00      250.00     12.50      12.50      250.00      250.00     10.00      10.00      250.00      250.00      7.50      7.50
   250.00      250.00     12.50      12.50      250.00      250.00     10.00      10.00      250.00      250.00      7.50      7.50
     0.00        0.00      0.00       0.00        0.00        0.00      0.00       0.00        0.00        0.00      0.00      0.00
   250.00      250.00     15.00      15.00      250.00      250.00     12.50      12.50      250.00      250.00     10.00     10.00
   250.00      250.00     15.00      15.00      250.00      250.00     12.50      12.50      250.00      250.00     10.00     10.00
   250.00      250.00     15.00      15.00      250.00      250.00     12.50      12.50      250.00      250.00     10.00     10.00
   250.00      250.00     15.00      15.00      250.00      250.00     12.50      12.50      250.00      250.00     10.00     10.00
   250.00      250.00     15.00      15.00      250.00      250.00     12.50      12.50      250.00      250.00     10.00     10.00
   250.00      250.00     15.00      15.00      250.00      250.00     12.50      12.50      250.00      250.00     10.00     10.00
   250.00      250.00     15.00      15.00      250.00      250.00     12.50      12.50      250.00      250.00     10.00     10.00
   250.00      250.00     15.00      15.00      250.00      250.00     12.50      12.50      250.00      250.00     10.00     10.00
   250.00      250.00     15.00      15.00      250.00      250.00     12.50      12.50      250.00      250.00     10.00     10.00
   250.00      250.00     15.00      15.00      250.00      250.00     12.50      12.50      250.00      250.00     10.00     10.00
   250.00      250.00     15.00      15.00      250.00      250.00     12.50      12.50      250.00      250.00     10.00     10.00
   250.00      250.00     15.00      15.00      250.00      250.00     12.50      12.50      250.00      250.00     10.00     10.00
     0.00        0.00      0.00       0.00        0.00        0.00      0.00       0.00        0.00        0.00      0.00      0.00
   250.00      250.00     17.50      17.50      250.00      250.00     15.00      15.00      250.00      250.00     12.50     12.50
   250.00      250.00     17.50      17.50      250.00      250.00     15.00      15.00      250.00      250.00     12.50     12.50
   250.00      250.00     17.50      17.50      250.00      250.00     15.00      15.00      250.00      250.00     12.50     12.50
   250.00      250.00     17.50      17.50      250.00      250.00     15.00      15.00      250.00      250.00     12.50     12.50
   250.00      250.00     17.50      17.50      250.00      250.00     15.00      15.00      250.00      250.00     12.50     12.50
   250.00      250.00     17.50      17.50      250.00      250.00     15.00      15.00      250.00      250.00     12.50     12.50
   250.00      250.00     17.50      17.50      250.00      250.00     15.00      15.00      250.00      250.00     12.50     12.50
   250.00      250.00     17.50      17.50      250.00      250.00     15.00      15.00      250.00      250.00     12.50     12.50
   250.00      250.00     17.50      17.50      250.00      250.00     15.00      15.00      250.00      250.00     12.50     12.50
   250.00      250.00     17.50      17.50      250.00      250.00     15.00      15.00      250.00      250.00     12.50     12.50
   250.00      250.00     17.50      17.50      250.00      250.00     15.00      15.00      250.00      250.00     12.50     12.50
   250.00      250.00     17.50      17.50      250.00      250.00     15.00      15.00      250.00      250.00     12.50     12.50
     0.00        0.00      0.00       0.00        0.00        0.00      0.00       0.00        0.00        0.00      0.00      0.00
                                                250.00      250.00     17.50      17.50      250.00      250.00     15.00     15.00
                                                250.00      250.00     17.50      17.50      250.00      250.00     15.00     15.00
                                                250.00      250.00     17.50      17.50      250.00      250.00     15.00     15.00
                                                250.00      250.00     17.50      17.50      250.00      250.00     15.00     15.00
                                                250.00      250.00     17.50      17.50      250.00      250.00     15.00     15.00
                                                250.00      250.00     17.50      17.50      250.00      250.00     15.00     15.00
                                                250.00      250.00     17.50      17.50      250.00      250.00     15.00     15.00
                                                250.00      250.00     17.50      17.50      250.00      250.00     15.00     15.00
                                                250.00      250.00     17.50      17.50      250.00      250.00     15.00     15.00
                                                250.00      250.00     17.50      17.50      250.00      250.00     15.00     15.00
                                                250.00      250.00     17.50      17.50      250.00      250.00     15.00     15.00
                                                250.00      250.00     17.50      17.50      250.00      250.00     15.00     15.00
                                                  0.00        0.00      0.00       0.00        0.00        0.00      0.00      0.00
                                                                                             250.00      250.00     17.50     17.50
                                                                                             250.00      250.00     17.50     17.50
                                                                                             250.00      250.00     17.50     17.50
                                                                                             250.00      250.00     17.50     17.50
                                                                                             250.00      250.00     17.50     17.50
<CAPTION> 

    amt subject to                                   amt subject to
    surrender charge        surrender charge         surrender charge        surrender charge
       12/31/96                                         12/31/97
<S>            <C>          <C>           <C>       <C>         <C>          <C>          <C> 
   250.00      250.00         5.00        5.00      250.00      250.00        2.50        2.50
   250.00      250.00         5.00        5.00      250.00      250.00        2.50        2.50
   250.00      250.00         5.00        5.00      250.00      250.00        2.50        2.50
   250.00      250.00         5.00        5.00      250.00      250.00        2.50        2.50
   250.00      250.00         5.00        5.00      250.00      250.00        2.50        2.50
   250.00      250.00         5.00        5.00      250.00      250.00        2.50        2.50
   250.00      250.00         5.00        5.00      250.00      250.00        2.50        2.50
     0.00        0.00         0.00        0.00        0.00        0.00        0.00        0.00
   250.00      250.00         7.50        7.50      250.00      250.00        5.00        5.00
   250.00      250.00         7.50        7.50      250.00      250.00        5.00        5.00
   250.00      250.00         7.50        7.50      250.00      250.00        5.00        5.00
   250.00      250.00         7.50        7.50      250.00      250.00        5.00        5.00
   250.00      250.00         7.50        7.50      250.00      250.00        5.00        5.00
   250.00      250.00         7.50        7.50      250.00      250.00        5.00        5.00
   250.00      250.00         7.50        7.50      250.00      250.00        5.00        5.00
   250.00      250.00         7.50        7.50      250.00      250.00        5.00        5.00
   250.00      250.00         7.50        7.50      250.00      250.00        5.00        5.00
   250.00      250.00         7.50        7.50      250.00      250.00        5.00        5.00
   250.00      250.00         7.50        7.50      250.00      250.00        5.00        5.00
   250.00      250.00         7.50        7.50      250.00      250.00        5.00        5.00
     0.00        0.00         0.00        0.00        0.00        0.00        0.00        0.00
   250.00      250.00        10.00       10.00      250.00      250.00        7.50        7.50
   250.00      250.00        10.00       10.00      250.00      250.00        7.50        7.50
   250.00      250.00        10.00       10.00      250.00      250.00        7.50        7.50
   250.00      250.00        10.00       10.00      250.00      250.00        7.50        7.50
   250.00      250.00        10.00       10.00      250.00      250.00        7.50        7.50
   250.00      250.00        10.00       10.00      250.00      250.00        7.50        7.50
   250.00      250.00        10.00       10.00      250.00      250.00        7.50        7.50
   250.00      250.00        10.00       10.00      250.00      250.00        7.50        7.50
   250.00      250.00        10.00       10.00      250.00      250.00        7.50        7.50
   250.00      250.00        10.00       10.00      250.00      250.00        7.50        7.50
   250.00      250.00        10.00       10.00      250.00      250.00        7.50        7.50
   250.00      250.00        10.00       10.00      250.00      250.00        7.50        7.50
     0.00        0.00         0.00        0.00        0.00        0.00        0.00        0.00
   250.00      250.00        12.50       12.50      250.00      250.00       10.00       10.00
   250.00      250.00        12.50       12.50      250.00      250.00       10.00       10.00
   250.00      250.00        12.50       12.50      250.00      250.00       10.00       10.00
   250.00      250.00        12.50       12.50      250.00      250.00       10.00       10.00
   250.00      250.00        12.50       12.50      250.00      250.00       10.00       10.00
   250.00      250.00        12.50       12.50      250.00      250.00       10.00       10.00
   250.00      250.00        12.50       12.50      250.00      250.00       10.00       10.00
   250.00      250.00        12.50       12.50      250.00      250.00       10.00       10.00
   250.00      250.00        12.50       12.50      250.00      250.00       10.00       10.00
   250.00      250.00        12.50       12.50      250.00      250.00       10.00       10.00
   250.00      250.00        12.50       12.50      250.00      250.00       10.00       10.00
   250.00      250.00        12.50       12.50      250.00      250.00       10.00       10.00
     0.00        0.00         0.00        0.00        0.00        0.00        0.00        0.00
   250.00      250.00        15.00       15.00      250.00      250.00       12.50       12.50
   250.00      250.00        15.00       15.00      250.00      250.00       12.50       12.50
   250.00      250.00        15.00       15.00      250.00      250.00       12.50       12.50
   250.00      250.00        15.00       15.00      250.00      250.00       12.50       12.50
   250.00      250.00        15.00       15.00      250.00      250.00       12.50       12.50
</TABLE> 
<PAGE>
 
<TABLE> 
<CAPTION> 
amt subject to                                  amt subject to                                amt subject to
surrender charge       surrender charge         surrender charge      surrender charge        surrender charge      surrender charge
    12/31/93                                       12/31/94                                      12/31/95
<S>                    <C>                      <C>                   <C>                    <C>         <C>        <C>       <C> 
                                                                                             250.00      250.00     17.50     17.50
                                                                                             250.00      250.00     17.50     17.50
                                                                                             250.00      250.00     17.50     17.50
                                                                                             250.00      250.00     17.50     17.50
                                                                                             250.00      250.00     17.50     17.50
                                                                                             250.00      250.00     17.50     17.50
                                                                                             250.00      250.00     17.50     17.50
                                                                                               0.00        0.00      0.00      0.00







                         840.00     840.00                            840.00     840.00                            840.00    840.00
</TABLE> 

<TABLE> 
<CAPTION> 
   amt subject to                                   amt subject to
   surrender charge        surrender charge         surrender charge        surrender charge
      12/31/96                                         12/31/97
<S>           <C>          <C>          <C>        <C>         <C>          <C>         <C> 
  250.00      250.00        15.00       15.00      250.00      250.00       12.50       12.50
  250.00      250.00        15.00       15.00      250.00      250.00       12.50       12.50
  250.00      250.00        15.00       15.00      250.00      250.00       12.50       12.50
  250.00      250.00        15.00       15.00      250.00      250.00       12.50       12.50
  250.00      250.00        15.00       15.00      250.00      250.00       12.50       12.50
  250.00      250.00        15.00       15.00      250.00      250.00       12.50       12.50
  250.00      250.00        15.00       15.00      250.00      250.00       12.50       12.50
    0.00        0.00         0.00        0.00        0.00        0.00        0.00        0.00
  250.00      250.00        17.50       17.50      250.00      250.00       15.00       15.00
  250.00      250.00        17.50       17.50      250.00      250.00       15.00       15.00
  250.00      250.00        17.50       17.50      250.00      250.00       15.00       15.00
  250.00      250.00        17.50       17.50      250.00      250.00       15.00       15.00
  250.00      250.00        17.50       17.50      250.00      250.00       15.00       15.00
  250.00      250.00        17.50       17.50      250.00      250.00       15.00       15.00
  250.00      250.00        17.50       17.50      250.00      250.00       15.00       15.00
  250.00      250.00        17.50       17.50      250.00      250.00       15.00       15.00
  250.00      250.00        17.50       17.50      250.00      250.00       15.00       15.00
  250.00      250.00        17.50       17.50      250.00      250.00       15.00       15.00
  250.00      250.00        17.50       17.50      250.00      250.00       15.00       15.00
  250.00      250.00        17.50       17.50      250.00      250.00       15.00       15.00
    0.00        0.00         0.00        0.00        0.00        0.00        0.00        0.00
                                                   250.00      250.00       17.50       17.50
                                                   250.00      250.00       17.50       17.50
                                                   250.00      250.00       17.50       17.50
                                                   250.00      250.00       17.50       17.50
                                                   250.00      250.00       17.50       17.50
                                                   250.00      250.00       17.50       17.50
                                                   250.00      250.00       17.50       17.50
                                                   250.00      250.00       17.50       17.50
                                                   250.00      250.00       17.50       17.50
                                                   250.00      250.00       17.50       17.50
                                                   250.00      250.00       17.50       17.50
                                                   250.00      250.00       17.50       17.50
                                                     0.00        0.00        0.00        0.00

                           840.00      840.00                              840.00      840.00
</TABLE> 
<PAGE>
 

                           HYPOTHETICAL PERFORMANCE
                            FOR A CONTRACT BASED ON
               AVERAGE ANNUAL TOTAL RETURNS FOR BOND INCOME FUND

<TABLE> 
<CAPTION> 

Period Ending:                  12/31/97

1 Year                             0.66%
5 Year                             4.30%
10 Year                            6.09%
since inception of fund            7.03%
since inc sub acct                 4.69%
<S>                     <C>         <C>          <C>                       <C>           <C>      <C>         <C> 
           8/26/83             1    1000            1000                   12/31/87      1.528314 1000        1000.00
           8/26/84      1.058988     -30         1028.99                   12/31/88       1.63397  -30        1039.13
           8/26/85      1.262524     -30         1196.76                   12/31/89      1.810362  -30        1121.31
           8/26/86      1.477632     -30         1370.66                   12/31/90      1.930406  -30        1165.66
           8/26/87       1.51177     -30         1372.33                   12/31/91      2.246568  -30        1326.58
           8/26/88      1.593094     -30         1416.15                   12/31/92      2.397657  -30        1385.79
           8/26/89      1.760406     -30         1534.88                   12/31/93      2.663825  -30        1509.63
           8/26/90      1.822549     -30         1559.06                   12/31/94      2.539801  -30        1409.34
           8/26/91      2.066793     -30         1737.99                   12/31/95      3.037039  -30        1655.26
           8/26/92        2.3762     -30         1968.18                   12/31/96      3.134109  -30        1678.17
           8/26/93       2.65896     -30         2172.39                   12/31/97      3.428788  -30        1805.96
           8/26/94      2.568821     -30         2068.74
           8/26/95      2.866746     -30         2278.67                                                        6.09%
           8/26/96      2.990137     -30         2346.75
           8/26/97      3.286863     -30         2549.63
          12/31/97      3.428788     -10         2649.72

# leap years                           4           7.03%

           4/19/95      2.700549    1000            1000
           4/19/96      2.942095     -30         1059.44
           4/19/97      3.124276     -30         1095.05
          12/31/97      3.428788     -20         1181.78
                                                  181.78
                                                      50
                                                 1131.78

                                                   4.69%
</TABLE> 
<TABLE> 
<S>               <C>       <C>         <C>                      <C>           <C>      <C>          <C> 
                                           1000
     12/31/92     2.397657  1000        1000.00                  12/31/96      3.134109 1000.00      1000.00
     12/31/93     2.663825   -30        1081.01                  12/31/97      3.428788  -30.00      1064.02
     12/31/94     2.539801   -30        1000.68                                                       106.40
     12/31/95     3.037039   -30        1166.59                                                     57.45725
     12/31/96     3.134109   -30        1173.88                                                      1006.57
     12/31/97     3.428788   -30        1254.25
                                         254.25                                                        0.66%
                                             20                      0.07
                                        1234.25                      0.06
                                                                     0.05
                                          4.30%                      0.04
                                                                     0.03
                                                                     0.02
                                                                     0.01
</TABLE> 

                                    Page 1
<PAGE>
 

                           HYPOTHETICAL PERFORMANCE
                            FOR A CONTRACT BASED ON
              AVERAGE ANNUAL TOTAL RETURNS FOR MONEY MARKET FUND


<TABLE> 
<CAPTION> 

Period Ending:                  12/31/97

1 Year                            -4.52%
5 Year                            -0.17%
10 Year                            1.67%
since inception-fund               2.68%
since inc sub acct                -0.72%
<S>                     <C>         <C>           <C>                      <C>           <C>      <C>         <C> 
           8/26/83             1    1000            1000                   12/31/87      1.327245 1000        1000.00
           8/26/84      1.086607     -30         1056.61                   12/31/88      1.407892  -30        1030.76
           8/26/85      1.172629     -30         1110.25                   12/31/89      1.517621  -30        1081.10
           8/26/86      1.243874     -30         1147.71                   12/31/90      1.619846  -30        1123.92
           8/26/87      1.302088     -30         1171.42                   12/31/91      1.697425  -30        1147.75
           8/26/88      1.376028     -30         1207.94                   12/31/92      1.738206  -30        1145.32
           8/26/89      1.480539     -30         1269.69                   12/31/93      1.765866  -30        1133.55
           8/26/90      1.583805     -30         1328.25                   12/31/94      1.811432  -30        1132.80
           8/26/91      1.674056     -30         1373.94                   12/31/95      1.889065  -30        1151.35
           8/26/92      1.727305     -30         1387.64                   12/31/96      1.959126  -30        1164.05
           8/26/93      1.756273     -30         1380.91                   12/31/97      2.036045  -30        1179.75
           8/26/94      1.790074     -30         1377.49
           8/26/95       1.86249     -30         1403.21                                                        1.67%
           8/26/96      1.934391     -30         1427.38
           8/26/97        2.0085     -30         1452.07
          12/31/97      2.036045     -10         1461.98

# leap years                           4           2.68%

           4/19/95      1.83483     1000            1000
           4/19/96      1.910036     -30         1010.99
           4/19/97      1.980751     -30         1018.42
          12/31/97      2.036045     -20         1026.85
                                                  102.68
                                                   46.21
                                                  980.64

                                                  -0.72%
<CAPTION> 
<S>             <C>       <C>        <C>                         <C>          <C>       <C>        <C> 
   12/31/92     1.738206  1000        1000.00                    12/31/96     1.959126  1000.00     1000.00
   12/31/93     1.765866   -30         985.91                    12/31/97     2.036045   -30.00     1009.26
   12/31/94     1.811432   -30         981.35                                                        100.93
   12/31/95     1.889065   -30         993.41                                                      54.50014
   12/31/96     1.959126   -30        1000.25                                                        954.76
   12/31/97     2.036045   -30        1009.53
                                       100.95                                                        -4.52%
                                     18.17148

                                       991.36

                                       -0.17%
</TABLE> 

                                    Page 1
<PAGE>
 
<TABLE> 
<CAPTION> 

CALCULATION            $10,000 Single Payment                        0 :Prem Tax

Contract Values

                                  Growth                                                         Growth
                    Midcap      and Income                                        Midcap       and Income             Surr chrg calc
                        CV             CV     Paymts            Fee                 UV's           UV's
     <S>         <C>            <C>          <C>                <C>             <C>            <C>              <C>   <C> 
       5/1/93    10,000.00      10,000.00    $10,000              0                    1              1
     12/31/93    11,370.39      11,321.11          0              0             1.137039       1.132111         1           0.07
       5/1/94    10,839.32      10,888.15          0            -30             1.086932       1.091815         2           0.06
     12/31/94    11,157.06      11,004.57          0              0             1.118794       1.103489         2           0.06
       5/1/95    12,109.04      12,178.02          0            -30             1.217264       1.224166         3           0.05
     12/31/95    14,313.47      14,780.38          0              0             1.438865       1.485762         3           0.05
       5/1/96    15,595.42      15,502.20          0            -30             1.570749       1.561336         4           0.04
     12/31/96    16,574.48      17,185.98          0              0             1.669358       1.730922         4           0.04
       5/1/97    16,413.94      18,255.09          0            -30              1.65621       1.841621         5           0.03
     12/31/97    19,149.94      22,593.88          0              0              1.93228       2.279329         5           0.03

<CAPTION> 

                                        $10,000 Single Payment

        Surrender Values                 No Premium Tax                      free withdrawal amount
                                           Growth                                           Growth
                              Midcap     and Income                           Midcap      and Income
<S>         <C>            <C>           <C>                  <C>          <C>            <C> 

 8          12/31/93       10,650.39     10,601.11            12/31/93       1370.39        1321.11
 0            5/1/94
 8          12/31/94       10,537.06     10,389.62            12/31/94      1157.061       1088.815
 0            5/1/95
 8          12/31/95       13,793.47     14,260.38            12/31/95      4313.475       4780.385
 0            5/1/96
 8          12/31/96       16,154.48     16,765.98            12/31/95      6574.479       7185.982
 0            5/1/97
 8          12/31/97       18,829.94     22,273.88            12/31/95       9149.94       12593.88

</TABLE> 
<PAGE>
 
<TABLE> 
<CAPTION> 

CALCULATION         $250 Payment per month            Prem tax:               0

                                      No Premium Tax

        Cumulative           Midcap        Growth                        Net
          Payments           Growth      and Income    Paymts         Paymts           Fee           UV's           UV's
<S>      <C>               <C>           <C>           <C>            <C>              <C>       <C>            <C>  
  5/1/93       250           250.00        250.00         250            250             0              1              1
  6/1/93       500           510.09        509.27         250            250             0       1.040371       1.037074
  7/1/93       750           760.75        760.47         250            250             0       1.041713       1.039517
  8/1/93     1,000         1,012.05      1,019.64         250            250             0       1.043486       1.052057
  9/1/93     1,250         1,310.34      1,299.18         250            250             0       1.093282        1.08253
 10/1/93     1,500         1,598.45      1,575.66         250            250             0       1.125082       1.104598
 11/1/93     1,750         1,855.51      1,856.58         250            250             0        1.13005       1.126276
 12/1/93     2,000         2,078.53      2,081.46         250            250             0       1.113616       1.111038
12/31/93     2,000         2,122.25      2,120.94           0              0             0       1.137039       1.132111
  1/1/94     2,250         2,372.25      2,370.94         250            250             0       1.137039       1.132111
  2/1/94     2,500         2,691.98      2,664.53         250            250             0       1.170461       1.152921
  3/1/94     2,750         2,873.09      2,865.51         250            250             0       1.140508       1.131714
  4/1/94     3,000         2,994.83      2,983.12         250            250             0       1.089595       1.079425
  5/1/94     3,250         3,207.51      3,237.36         250            250           -30       1.086932       1.091815
  6/1/94     3,500         3,441.85      3,463.79         250            250             0       1.081625       1.083865
  7/1/94     3,750         3,579.91      3,644.03         250            250             0       1.046447       1.062039
  8/1/94     4,000         3,931.39      3,967.75         250            250             0       1.076112       1.083523
  9/1/94     4,250         4,282.27      4,290.02         250            250             0       1.103724       1.103259
 10/1/94     4,500         4,501.17      4,445.79         250            250             0       1.095708       1.079025
 11/1/94     4,750         4,910.80      4,823.99         250            250             0       1.134567        1.11014
 12/1/94     5,000         4,951.39      4,922.85         250            250             0       1.086185        1.07536
12/31/94     5,000         5,100.04      5,051.63           0              0             0       1.118794       1.103489
  1/1/95     5,250         5,350.04      5,301.63         250            250             0       1.118794       1.103489
  2/1/95     5,500         5,636.62      5,635.50         250            250             0       1.126445       1.120946
  3/1/95     5,750         6,092.30      6,032.99         250            250             0       1.167548       1.150283
  4/1/95     6,000         6,534.19      6,445.07         250            250             0       1.204323       1.181186
  5/1/95     6,250         6,824.40      6,899.58         250            250           -30       1.217264       1.224166
  6/1/95     6,500         7,321.56      7,373.12         250            250             0       1.261349       1.263827
  7/1/95     6,750         7,987.03      7,955.40         250            250             0       1.332925       1.320784
  8/1/95     7,000         8,493.01      8,431.89         250            250             0       1.375645       1.358386
  9/1/95     7,250         8,977.90      8,862.75         250            250             0       1.413691       1.387522
 10/1/95     7,500         9,508.66      9,431.28         250            250             0       1.457901        1.43739
 11/1/95     7,750         9,662.60      9,564.04         250            250             0       1.443172       1.419522
 12/1/95     8,000         9,991.75     10,060.71         250            250             0       1.454994       1.456134
12/31/95     8,000         9,880.99     10,265.42           0              0             0       1.438865       1.485762
  1/1/96     8,250        10,130.99     10,515.42         250            250             0       1.438865       1.485762
  2/1/96     8,500        10,684.37     11,050.24         250            250             0       1.481953       1.526006
  3/1/96     8,750        11,028.27     11,424.36         250            250             0       1.494977       1.543146
  4/1/96     9,000        11,374.83     11,803.25         250            250             0       1.508066       1.560556
  5/1/96     9,250        12,067.62     12,029.15         250            250           -30       1.570749       1.561336
  6/1/96     9,500        12,586.68     12,419.65         250            250             0        1.60577       1.579573
  7/1/96     9,750        12,817.54     12,475.60         250            250             0       1.603329       1.554893
  8/1/96    10,000        12,277.26     12,208.27         250            250             0       1.504474       1.490415
  9/1/96    10,250        12,720.77     12,579.18         250            250             0       1.528187       1.505176
 10/1/96    10,500        13,975.63     13,453.40         250            250             0       1.648903       1.579868
 11/1/96    10,750        14,192.45     14,046.49         250            250             0       1.644989       1.620158
 12/1/96    11,000        15,178.68     15,531.84         250            250             0       1.730322       1.762647
12/31/96    11,000        14,643.89     15,252.29           0              0             0       1.669358       1.730922
  1/1/97    11,250        14,893.89     15,502.29         250            250             0       1.669358       1.730922
  2/1/97    11,500        15,958.67     16,514.04         250            250             0       1.760681       1.815975
  3/1/97    11,750        15,774.34     17,008.79         250            250             0       1.712762        1.84289
  4/1/97    12,000        14,813.07     16,507.44         250            250             0       1.581244       1.761481
  5/1/97    12,250        15,735.35     17,478.46         250            250           -30        1.65621       1.841621
  6/1/97    12,500        17,290.96     18,842.22         250            250             0       1.793631       1.958973
  7/1/97    12,750        18,042.81     20,117.07         250            250             0       1.845689       2.065524
  8/1/97    13,000        19,442.09     21,418.70         250            250             0       1.963254         2.1735
  9/1/97    13,250        18,848.49     21,129.70         250            250             0       1.878068       2.118804
 10/1/97    13,500        19,675.96     22,807.80         250            250             0       1.935607       2.262008
 11/1/97    13,750        19,094.11     21,915.87         250            250             0       1.853775       2.148755
 12/1/97    14,000        20,172.54     23,403.39         250            250             0       1.934204       2.270089
 12/31/97   14,000        20,152.48     23,498.65           0              0             0        1.93228       2.279329

IRR calc (monthly):          1.219%        1.702%       14000          14000

<CAPTION> 

             Surrender Values                Surrender charge                                 free withdrawal 

          Midcap             Growth         Midcap          Growth                          Midcap         Growth
          Growth           and Income       Growth        and Income                        Growth       and Income
<S>      <C>               <C>              <C>           <C>                       <C>     <C>          <C>  
   0                                                                                5/1/93
   1                                                                                6/1/93
   2                                                                                7/1/93
   3                                                                                8/1/93
   4                                                                                9/1/93
   5                                                                               10/1/93
   6                                                                               11/1/93
   7                                                                               12/1/93
   8      1,962.25          1,960.94         140.00        140.00                 12/31/93    122.247      120.9435 
   8                                                                                1/1/94
   9                                                                                2/1/94
  10                                                                                3/1/94
  11                                                                                4/1/94
   0                                                                                5/1/94
   1                                                                                6/1/94
   2                                                                                7/1/94
   3                                                                                8/1/94
   4                                                                                9/1/94
   5                                                                               10/1/94
   6                                                                               11/1/94
   7                                                                               12/1/94
   8      4,765.49          4,720.67         314.55        310.95                 12/31/94   320.7511      323.7358 
   8                                                                                1/1/95
   9                                                                                2/1/95
  10                                                                                3/1/95
  11                                                                                4/1/95
   0                                                                                5/1/95
   1                                                                                6/1/95
   2                                                                                7/1/95
   3                                                                                8/1/95
   4                                                                                9/1/95
   5                                                                               10/1/95
   6                                                                               11/1/95
   7                                                                               12/1/95
   8      9,370.99          9,755.42         490.00        490.00                 12/31/95    1880.99      2265.415 
   8                                                                                1/1/96
   9                                                                                2/1/96
  10                                                                                3/1/96
  11                                                                                4/1/96
   0                                                                                5/1/96
   1                                                                                6/1/96
   2                                                                                7/1/96
   3                                                                                8/1/96
   4                                                                                9/1/96
   5                                                                               10/1/96
   6                                                                               11/1/96
   7                                                                               12/1/96
   8     14,003.89         14,612.29         620.00        620.00                 12/31/96   3643.892      4252.293
   8                                                                                1/1/97
   9                                                                                2/1/97
  10                                                                                3/1/97
  11                                                                                4/1/97
   0                                                                                5/1/97
   1                                                                                6/1/97
   2                                                                                7/1/97
   3                                                                                8/1/97
   4                                                                                9/1/97
   5                                                                               10/1/97
   6                                                                               11/1/97
   7                                                                               12/1/97
   8     19,412.48         22,758.65         720.00        720.00                 12/31/97   6152.477      9498.652

            1.098%            1.602%


</TABLE> 
<PAGE>
 
<TABLE> 
<CAPTION> 

 amt subject to                                 amt subject to                             amt subject to
  surr charge         surrender charge           surr charge         surrender charge       surr charge       surrender charge
   12/31/93                                       12/31/94                                   12/31/95
 <S>            <C>         <C>         <C>     <C>           <C>         <C>        <C>   <C>            <C>       <C>       <C> 
    250.00      250.00      17.50       17.50      250.00     250.00      15.00      15.00    250.00      250.00    12.50     12.50
    250.00      250.00      17.50       17.50      250.00     250.00      15.00      15.00    250.00      250.00    12.50     12.50
    250.00      250.00      17.50       17.50      250.00     250.00      15.00      15.00    250.00      250.00    12.50     12.50
    250.00      250.00      17.50       17.50      250.00     250.00      15.00      15.00    250.00      250.00    12.50     12.50
    250.00      250.00      17.50       17.50      250.00     250.00      15.00      15.00    250.00      250.00    12.50     12.50
    250.00      250.00      17.50       17.50      250.00     250.00      15.00      15.00    250.00      250.00    12.50     12.50
    250.00      250.00      17.50       17.50      250.00     250.00      15.00      15.00    250.00      250.00    12.50     12.50
    250.00      250.00      17.50       17.50      250.00     250.00      15.00      15.00    250.00      250.00    12.50     12.50
      0.00        0.00       0.00        0.00        0.00       0.00       0.00       0.00      0.00        0.00     0.00      0.00
                                                   250.00     250.00      17.50      17.50    250.00      250.00    15.00     15.00
                                                   250.00     250.00      17.50      17.50    250.00      250.00    15.00     15.00
                                                   250.00     250.00      17.50      17.50    250.00      250.00    15.00     15.00
                                                   250.00     250.00      17.50      17.50    250.00      250.00    15.00     15.00
                                                   250.00     250.00      17.50      17.50    250.00      250.00    15.00     15.00
                                                   250.00     250.00      17.50      17.50    250.00      250.00    15.00     15.00
                                                   250.00     250.00      17.50      17.50    250.00      250.00    15.00     15.00
                                                   250.00     250.00      17.50      17.50    250.00      250.00    15.00     15.00
                                                   250.00     250.00      17.50      17.50    250.00      250.00    15.00     15.00
                                                   250.00     250.00      17.50      17.50    250.00      250.00    15.00     15.00
                                                   250.00     227.89      17.50      15.95    250.00      250.00    15.00     15.00
                                                    29.29       0.00       2.05       0.00    250.00      250.00    15.00     15.00
                                                     0.00       0.00       0.00       0.00      0.00        0.00     0.00      0.00
                                                                                              250.00      250.00    17.50     17.50
                                                                                              250.00      250.00    17.50     17.50
                                                                                              250.00      250.00    17.50     17.50
                                                                                              250.00      250.00    17.50     17.50
                                                                                              250.00      250.00    17.50     17.50
                                                                                              250.00      250.00    17.50     17.50
                                                                                              250.00      250.00    17.50     17.50
                                                                                              250.00      250.00    17.50     17.50
                                                                                              250.00      250.00    17.50     17.50
                                                                                              250.00      250.00    17.50     17.50
                                                                                              250.00      250.00    17.50     17.50
                                                                                              250.00      250.00    17.50     17.50
                                                                                                0.00        0.00     0.00      0.00

  2,000.00    2,000.00     140.00      140.00    4,779.29   4,727.89     314.55     310.95  8,000.00    8,000.00   490.00    490.00

<CAPTION> 

amt subject to                                    amt subject to
 surr charge           surrender charge            surr charge            surrender charge
  12/31/96                                          12/31/97
<S>             <C>          <C>          <C>     <C>             <C>           <C>          <C> 
   250.00       250.00       10.00        10.00      250.00       250.00        7.50         7.50
   250.00       250.00       10.00        10.00      250.00       250.00        7.50         7.50
   250.00       250.00       10.00        10.00      250.00       250.00        7.50         7.50
   250.00       250.00       10.00        10.00      250.00       250.00        7.50         7.50
   250.00       250.00       10.00        10.00      250.00       250.00        7.50         7.50
   250.00       250.00       10.00        10.00      250.00       250.00        7.50         7.50
   250.00       250.00       10.00        10.00      250.00       250.00        7.50         7.50
   250.00       250.00       10.00        10.00      250.00       250.00        7.50         7.50
     0.00         0.00        0.00         0.00        0.00         0.00        0.00         0.00
   250.00       250.00       12.50        12.50      250.00       250.00       10.00        10.00
   250.00       250.00       12.50        12.50      250.00       250.00       10.00        10.00
   250.00       250.00       12.50        12.50      250.00       250.00       10.00        10.00
   250.00       250.00       12.50        12.50      250.00       250.00       10.00        10.00
   250.00       250.00       12.50        12.50      250.00       250.00       10.00        10.00
   250.00       250.00       12.50        12.50      250.00       250.00       10.00        10.00
   250.00       250.00       12.50        12.50      250.00       250.00       10.00        10.00
   250.00       250.00       12.50        12.50      250.00       250.00       10.00        10.00
   250.00       250.00       12.50        12.50      250.00       250.00       10.00        10.00
   250.00       250.00       12.50        12.50      250.00       250.00       10.00        10.00
   250.00       250.00       12.50        12.50      250.00       250.00       10.00        10.00
   250.00       250.00       12.50        12.50      250.00       250.00       10.00        10.00
     0.00         0.00        0.00         0.00        0.00         0.00        0.00         0.00
   250.00       250.00       15.00        15.00      250.00       250.00       12.50        12.50
   250.00       250.00       15.00        15.00      250.00       250.00       12.50        12.50
   250.00       250.00       15.00        15.00      250.00       250.00       12.50        12.50
   250.00       250.00       15.00        15.00      250.00       250.00       12.50        12.50
   250.00       250.00       15.00        15.00      250.00       250.00       12.50        12.50
   250.00       250.00       15.00        15.00      250.00       250.00       12.50        12.50
   250.00       250.00       15.00        15.00      250.00       250.00       12.50        12.50
   250.00       250.00       15.00        15.00      250.00       250.00       12.50        12.50
   250.00       250.00       15.00        15.00      250.00       250.00       12.50        12.50
   250.00       250.00       15.00        15.00      250.00       250.00       12.50        12.50
   250.00       250.00       15.00        15.00      250.00       250.00       12.50        12.50
   250.00       250.00       15.00        15.00      250.00       250.00       12.50        12.50
     0.00         0.00        0.00         0.00        0.00         0.00        0.00         0.00
   250.00       250.00       17.50        17.50      250.00       250.00       15.00        15.00
   250.00       250.00       17.50        17.50      250.00       250.00       15.00        15.00
   250.00       250.00       17.50        17.50      250.00       250.00       15.00        15.00
   250.00       250.00       17.50        17.50      250.00       250.00       15.00        15.00
   250.00       250.00       17.50        17.50      250.00       250.00       15.00        15.00
   250.00       250.00       17.50        17.50      250.00       250.00       15.00        15.00
   250.00       250.00       17.50        17.50      250.00       250.00       15.00        15.00
   250.00       250.00       17.50        17.50      250.00       250.00       15.00        15.00
   250.00       250.00       17.50        17.50      250.00       250.00       15.00        15.00
   250.00       250.00       17.50        17.50      250.00       250.00       15.00        15.00
   250.00       250.00       17.50        17.50      250.00       250.00       15.00        15.00
   250.00       250.00       17.50        17.50      250.00       250.00       15.00        15.00
     0.00         0.00        0.00         0.00        0.00         0.00        0.00         0.00
                                                     250.00       250.00       17.50        17.50
                                                     250.00       250.00       17.50        17.50
                                                     250.00       250.00       17.50        17.50
                                                     250.00       250.00       17.50        17.50
                                                     250.00       250.00       17.50        17.50
                                                     250.00       250.00       17.50        17.50
                                                     250.00       250.00       17.50        17.50
                                                     250.00       250.00       17.50        17.50
                                                     250.00       250.00       17.50        17.50
                                                     250.00       250.00       17.50        17.50
                                                     250.00       250.00       17.50        17.50
                                                     250.00       250.00       17.50        17.50
                                                       0.00         0.00        0.00         0.00

11,000.00    11,000.00      620.00       620.00   14,000.00    14,000.00      720.00       720.00

</TABLE> 
<PAGE>
 


                           HYPOTHETICAL PERFORMANCE
                            FOR A CONTRACT BASED ON
                 AVERAGE ANNUAL TOTAL RETURNS FOR Midcap FUND

<TABLE> 
<CAPTION> 

Period Ending:             12/31/97
                           
                           
                           
1 year                        6.75%
since inception              12.16%
since inc sub acct           15.12%

<S>             <C>            <C>       <C>                     <C>          <C>             <C>         <C> 
    4/30/93            1       1000         1000                 12/31/96     1.669358        1000           1000
    4/30/94     1.086932        -30      1056.93                 12/31/97      1.93228         -30        1127.50
    4/30/95     1.220857        -30      1157.16
    4/30/96     1.562561        -30      1451.04
    4/30/97     1.651851        -30      1503.95
   12/31/97      1.93228        -20      1739.27                                        free               127.50
# of leap years                   1                                                     surr chg               60
                         free             739.27                                        surr value        1067.50
                         surr chg             30                                    
                         surr value      1709.27                                        return              6.75%
                                    
                         return           12.16%


    4/19/95     1.201698       1000         1000
    4/19/96      1.51038        -30      1226.87
    4/19/97     1.576988        -30      1250.98
   12/31/97      1.93228        -20      1512.82
# of leap years                   1 
                         free             512.82
                         surr chg             50
                         surr value      1462.82
                     
                         return           15.12%
</TABLE> 


                                    Page 1
<PAGE>
 

                           HYPOTHETICAL PERFORMANCE
                            FOR A CONTRACT BASED ON
       AVERAGE ANNUAL TOTAL RETURNS FOR WESTPEAK GROWTH AND INCOME FUND

<TABLE> 
<CAPTION> 

Period Ending:              12/31/97

1 year                        22.68%
since inception               16.37%
since inc sub acct            23.22%
<S>                   <C>       <C>         <C>                        <C>           <C>      <C>            <C> 
          4/30/93            1  1000           1000                    12/31/96      1.730922    1000            1000
          4/30/94     1.091815   -30        1061.82                    12/31/97      2.279329     -30         1286.83
          4/30/95     1.224806   -30        1161.15
          4/30/96     1.558777   -30        1447.77
          4/30/97     1.844187   -30        1682.85
         12/31/97     2.279329   -20        2059.92                                           free             286.83
# leap years                       1                                                          surr chg             60
                              free          1059.92                                           surr value      1226.83
                              surr chg           30
                              surr value    2029.92                                           return           22.68%
                                       
                              return         16.37%


          4/19/95     1.193057  1000           1000
          4/19/96     1.540353   -30        1261.10
          4/19/97     1.782527   -30        1429.37
         12/31/97     2.279329   -20        1807.74
# of leap years                    1
                              free           807.74
                              surr chg           50
                              surr value    1757.74
                                       
                              return         23.22%
</TABLE> 
                                    Page 1
<PAGE>
 
<TABLE> 
<CAPTION> 

SMALL CAP FUND

CALCULATION            $10,000 Single Payment

No Premium Tax         Contract                                                           Surr Value              free withdrawal
                                       0                                                                          AMOUNTS
                         Sm Cap   Paymts     Fee        UV's                                  Sm Cap               Sm Cap
<S>        <C>        <C>         <C>       <C>     <C>           <C>     <C>   <C>      <C>                   <C> 
             5/2/94   10,000.00    10000       0           1       1      0.07
           12/31/94    9,590.97        0       0    0.959097       1      0.07    7         8,972.10                 1000
             5/2/95   10,161.73        0     -30    1.019173       2      0.06    0         9,609.57              959.097
           12/31/95   12,156.37        0       0    1.219226       2      0.06    7        11,538.87             2156.371
             5/2/96   13,711.53        0     -30     1.37821       3      0.05    0        13,211.53             3711.532
           12/31/96   15,637.59        0       0    1.571807       3      0.05    7        15,120.09             5637.589
             5/2/97   15,526.37        0     -30    1.563643       4      0.04    0        15,126.37             5526.367
           12/31/97   19,225.09        0       0    1.936137       4      0.04    7        18,807.59             9225.087

<CAPTION> 

PERCENT CHANGE                                                                            Surr Value

                         Sm Cap                                                               Sm Cap
<S>                      <C>                                                              <C> 
          12/31/94       -4.09%                                                              -10.28%
            5/2/95        5.95%                                                               -3.90%
          12/31/95       19.63%                                                               28.61%
            5/2/96       12.79%                                                               37.48%
          12/31/96       14.05%                                                               31.04%
            5/2/97       -0.71%                                                               14.49%
          12/31/97       23.82%                                                               24.39%
</TABLE> 
<PAGE>
 
<TABLE> 
<CAPTION> 

CALCULATION                        $250 Payment per month

No Premium Tax

                                                        0                                              Surr Value
             Cumulative                               Net                                                         FREE     SURR
               Payments       Sm Cap    Paymts     Paymts    Fee         UV's                     Sm Cap         WTHDRL     CHG
<S>          <C>            <C>         <C>        <C>       <C>     <C>        <C>    <C>     <C>    <C>        <C>       <C> 
     5/2/94         250       250.00       250        250      0            1    1     0.07
     6/1/94         500       495.00       250        250      0      0.98001    1     0.07     0
     7/1/94         750       735.38       250        250      0     0.960963    1     0.07     1
     8/1/94       1,000       985.76       250        250      0     0.961455    1     0.07     2
     9/1/94       1,250     1,278.83       250        250      0      1.00346    1     0.07     3
    10/1/94       1,500     1,531.64       250        250      0     1.005666    1     0.07     4
    11/1/94       1,750     1,763.34       250        250      0      0.99365    1     0.07     5
    12/1/94       2,000     1,921.23       250        250      0     0.941747    1     0.07     6
   12/31/94       2,000     1,956.62         0          0      0     0.959097    1     0.07     7     1,803.91     25.00    135.21
     1/1/95       2,250     2,206.62       250        250      0     0.959097    1     0.07     7
     2/1/95       2,500     2,459.41       250        250      0     0.960306    1     0.07     8
     3/1/95       2,750     2,790.57       250        250      0     0.991996    1     0.07     9
     4/1/95       3,000     3,101.20       250        250      0     1.013552    1     0.07    10
     5/1/95       3,250     3,362.17       250        250      0     1.017135    1     0.07    11
     5/2/95       3,250     3,338.90         0          0    -30     1.019173    2     0.06     0
     6/1/95       3,500     3,639.53       250        250      0     1.034626    2     0.06     0
     7/1/95       3,750     3,972.69       250        250      0     1.058267    2     0.06     1
     8/1/95       4,000     4,440.56       250        250      0     1.116305    2     0.06     2
     9/1/95       4,250     4,892.10       250        250      0     1.166968    2     0.06     3
    10/1/95       4,500     5,214.07       250        250      0     1.184137    2     0.06     4
    11/1/95       4,750     5,221.30       250        250      0     1.129002    2     0.06     5
    12/1/95       5,000     5,688.59       250        250      0     1.175987    2     0.06     6
   12/31/95       5,000     5,897.75         0          0      0     1.219226    2     0.06     7     5,550.25    897.75    330.00
     1/1/96       5,250     6,147.75       250        250      0     1.219226    2     0.06     7
     2/1/96       5,500     6,444.31       250        250      0     1.228459    2     0.06     8
     3/1/96       5,750     6,985.02       250        250      0     1.283877    2     0.06     9
     4/1/96       6,000     7,396.21       250        250      0     1.313504    2     0.06    10
     5/1/96       6,250     8,054.00       250        250      0     1.385924    3     0.05    11
     5/2/96       6,250     7,979.17         0          0    -30      1.37821    3     0.05     0
     6/1/96       6,500     8,582.84       250        250      0     1.439299    3     0.05     0
     7/1/96       6,750     8,648.53       250        250      0     1.408391    3     0.05     1
     8/1/96       7,000     8,467.75       250        250      0     1.338239    3     0.05     2
     9/1/96       7,250     9,056.89       250        250      0     1.391837    3     0.05     3
    10/1/96       7,500     9,601.58       250        250      0     1.437124    3     0.05     4
    11/1/96       7,750     9,949.16       250        250      0     1.451729    3     0.05     5
    12/1/96       8,000    10,689.93       250        250      0      1.52334    3     0.05     6
   12/31/96       8,000    11,030.05         0          0      0     1.571807    3     0.05     7    10,522.55   3030.05    490.00
     1/1/97       8,250    11,280.05       250        250      0     1.571807    3     0.05     7
     2/1/97       8,500    11,728.75       250        250      0     1.599495    3     0.05     8
     3/1/97       8,750    11,811.96       250        250      0      1.57675    3     0.05     9
     4/1/97       9,000    11,727.50       250        250      0     1.532103    3     0.05    10
     5/1/97       9,250    12,030.08       250        250      0     1.538972    4     0.04    11
     5/2/97       9,250    12,192.93         0          0    -30     1.563643    4     0.04     0
     6/1/97       9,500    13,368.94       250        250      0     1.682396    4     0.04     0
     7/1/97       9,750    14,194.76       250        250      0      1.75486    4     0.04     1
     8/1/97      10,000    15,246.48       250        250      0     1.853974    4     0.04     2
     9/1/97      10,250    15,785.93       250        250      0     1.889171    4     0.04     3
    10/1/97      10,500    16,988.59       250        250      0      2.00318    4     0.04     4
    11/1/97      10,750    16,636.61       250        250      0     1.932199    4     0.04     5
    12/1/97      11,000    16,921.59       250        250      0     1.936261    4     0.04     6
   12/31/97      11,000    16,920.50         0          0      0     1.936137    4     0.04     7    16,283.00   5920.50    620.00

IRR calc (monthly):           1.815%     11000                                                         1.660%
</TABLE> 

<TABLE> 
<CAPTION> 

 amt subject to                   amt subject to                   amt subject to                   amt subject to
  surr charge                      surr charge                      surr charge                      surr charge
  12/31/94          SURR           12/31/95         SURR            12/31/96         SURR            12/31/97         SURR
                    CHG                             CHG                              CHG                              CHG
<S>                 <C>           <C>               <C>            <C>               <C>            <C>               <C> 
  250.00            17.50          250.00           15.00           250.00           12.50           250.00           10.00
  250.00            17.50          250.00           15.00           250.00           12.50           250.00           10.00
  250.00            17.50          250.00           15.00           250.00           12.50           250.00           10.00
  250.00            17.50          250.00           15.00           250.00           12.50           250.00           10.00
  250.00            17.50          250.00           15.00           250.00           12.50           250.00           10.00
  250.00            17.50          250.00           15.00           250.00           12.50           250.00           10.00
  250.00            17.50          250.00           15.00           250.00           12.50           250.00           10.00
  181.62            12.71          250.00           15.00           250.00           12.50           250.00           10.00
    0.00                             0.00            0.00             0.00            0.00             0.00            0.00
                                   250.00           17.50           250.00           15.00           250.00           12.50
                                   250.00           17.50           250.00           15.00           250.00           12.50
                                   250.00           17.50           250.00           15.00           250.00           12.50
                                   250.00           17.50           250.00           15.00           250.00           12.50
                                   250.00           17.50           250.00           15.00           250.00           12.50
                                     0.00            0.00             0.00            0.00             0.00            0.00
                                   250.00           17.50           250.00           15.00           250.00           12.50
                                   250.00           17.50           250.00           15.00           250.00           12.50
                                   250.00           17.50           250.00           15.00           250.00           12.50
                                   250.00           17.50           250.00           15.00           250.00           12.50
                                   250.00           17.50           250.00           15.00           250.00           12.50
                                   250.00           17.50           250.00           15.00           250.00           12.50
                                   250.00           17.50           250.00           15.00           250.00           12.50
                                     0.00            0.00             0.00            0.00             0.00            0.00
                                                                    250.00           17.50           250.00           15.00
                                                                    250.00           17.50           250.00           15.00
                                                                    250.00           17.50           250.00           15.00
                                                                    250.00           17.50           250.00           15.00
                                                                    250.00           17.50           250.00           15.00
                                                                      0.00            0.00             0.00            0.00
                                                                    250.00           17.50           250.00           15.00
                                                                    250.00           17.50           250.00           15.00
                                                                    250.00           17.50           250.00           15.00
                                                                    250.00           17.50           250.00           15.00
                                                                    250.00           17.50           250.00           15.00
                                                                    250.00           17.50           250.00           15.00
                                                                    250.00           17.50           250.00           15.00
                                                                      0.00            0.00             0.00            0.00
                                                                                                     250.00           17.50
                                                                                                     250.00           17.50
                                                                                                     250.00           17.50
                                                                                                     250.00           17.50
                                                                                                     250.00           17.50
                                                                                                       0.00            0.00
                                                                                                     250.00           17.50
                                                                                                     250.00           17.50
                                                                                                     250.00           17.50
                                                                                                     250.00           17.50
                                                                                                     250.00           17.50
                                                                                                     250.00           17.50
                                                                                                     250.00           17.50
                                                                                                       0.00            0.00


                                   135.21          330.00                           490.00                           620.00
</TABLE> 
<PAGE>
 

                            HYPOTHETICAL PERFORMANCE
                             FOR A CONTRACT BASED ON
                   AVERAGE ANNUAL TOTAL RETURNS FOR SMALL CAP

<TABLE> 
<CAPTION> 

Period Ending:          12/31/97


1 year                    14.18%
since inception - fund    16.35%
since inc sub acct        23.40%

<S>             <C>      <C>          <C>          <C>      <C>        <C>            <C>         <C>   
    5/2/94             1    1000          1000                12/31/96   1.571807       1000           1000
    5/2/95      1.019173     -30        989.17                12/31/97   1.936137        -30        1201.79
    5/2/96       1.37821     -30       1307.64
    5/2/97      1.563643     -30       1453.58
  12/31/97      1.936137   -17.5       1782.35      1799.85
# LEAP YEARS                   1                                                  free               201.79
                                                                                  surr chg               60
                          free          782.35                                    surr value        1141.79
                          surr chg          40
                          surr value   1742.35                                    return             14.18%

                          return        16.35%


   4/19/95      1.010468    1000          1000
   4/19/96      1.345853     -30       1301.91
   4/19/97      1.519313     -30       1439.71
  12/31/97      1.936137     -20       1814.69      1834.69
# LEAP YEARS                   1

                          free          814.69
                          surr chg          50
                          surr value   1764.69

                          return        23.40%

</TABLE> 


                                    Page 1
<PAGE>
 
CALCULATION                     $10,000 Single Payment

<TABLE> 
<CAPTION> 

No Premium Tax    Contract Value                                                               Surrender Value       
                  -----------------------                                                      --------------------- 
                                                                                                                     free withdrawal
                                                                                                                     AMOUNTS
                                                  0 :Prem Tax
                  Govt. Series                              Govt. Series                       Govt. Series          Govt. Series
                            CV          Paymts        Fee       UV's
      <S>            <C>                <C>           <C>     <C>            <C>  <C>     <C>  <C>                   <C> 
       11/1/94       10,000.00          10,000          0     0.999963       1    0.07
      12/31/94       10,038.07               0          0      1.00377       1    0.07    2        9,400.41                  1000
       11/1/95       11,140.80               0        -30     1.117039       2    0.06    0
      12/31/95       11,360.92               0          0     1.139109       2    0.06    2       10,755.92              1360.919
       11/1/96       11,494.59               0        -30      1.15552       3    0.05    0
      12/31/96       11,548.68               0          0     1.160957       3    0.05    2       11,043.68              1548.679
       11/1/97       12,211.48               0        -30     1.230602       4    0.04    0
      12/31/97       12,328.54               0          0     1.242399       4    0.04    2       11,923.54               2328.54

<CAPTION> 

Percent Change    Contract Value                  0 :Prem Tax                                  Surrender Value       
                  -----------------------                                                      --------------------- 

                  Govt. Series                                                                 Govt. Series
      12/31/94           0.38%                                                                       -6.00%
       11/1/95          10.99%
      12/31/95           1.98%                                                                       14.42%
       11/1/96           1.18%
      12/31/96           0.47%                                                                        2.68%
       11/1/97           5.74%
      12/31/97           0.96%                                                                        7.97%

</TABLE> 
<PAGE>
 
<TABLE> 
<CAPTION> 

CALCULATION               $250 Per Month             0 :Prem Tax

No Premium Tax                                                  

                                                                                                                                   
           Cumulative      Govt. Series                     Net                   Govt. Series
             Payments           CV                       Paymts           Fee          UV's
<S>        <C>            <C>                    <C>     <C>              <C>     <C>                      <C>       <C>       <C> 
 11/1/94          250       250.00               250        250             0      0.999963                0         1         0.07
 12/1/94          500       499.47               250        250             0      0.997855                1         1         0.07
12/31/94          500       502.43                 0          0             0       1.00377                2         1         0.07
  1/1/95          750       752.43               250        250             0       1.00377                2         1         0.07
  2/1/95        1,000     1,009.82               250        250             0      1.013618                3         1         0.07
  3/1/95        1,250     1,278.81               250        250             0      1.032681                4         1         0.07
  4/1/95        1,500     1,534.85               250        250             0      1.037563                5         1         0.07
  5/1/95        1,750     1,799.42               250        250             0       1.04741                6         1         0.07
  6/1/95        2,000     2,121.39               250        250             0      1.089303                7         1         0.07
  7/1/95        2,250     2,374.97               250        250             0      1.091139                8         1         0.07
  8/1/95        2,500     2,611.28               250        250             0      1.084849                9         1         0.07
  9/1/95        2,750     2,896.75               250        250             0      1.099587               10         1         0.07
 10/1/95        3,000     3,156.89               250        250             0      1.103437               11         1         0.07
 11/1/95        3,250     3,415.81               250        250           -30      1.117039                0         2         0.06
 12/1/95        3,500     3,695.50               250        250             0       1.12675                1         2         0.06
12/31/95        3,500     3,736.04                 0          0             0      1.139109                2         2         0.06
  1/1/96        3,750     3,982.10               250        250             0      1.137909                2         2         0.06
  2/1/96        4,000     4,252.93               250        250             0       1.14386                3         2         0.06
  3/1/96        4,250     4,460.09               250        250             0      1.132339                4         2         0.06
  4/1/96        4,500     4,660.43               250        250             0      1.119731                5         2         0.06
  5/1/96        4,750     4,879.61               250        250             0      1.112326                6         2         0.06
  6/1/96        5,000     5,115.20               250        250             0      1.109041                7         2         0.06
  7/1/96        5,250     5,406.60               250        250             0      1.118018                8         2         0.06
  8/1/96        5,500     5,704.86               250        250             0      1.127996                9         2         0.06
  9/1/96        5,750     5,917.71               250        250             0      1.120651               10         2         0.06
 10/1/96        6,000     6,267.02               250        250             0      1.139457               11         2         0.06
 11/1/96        6,250     6,575.36               250        250           -30       1.15552                0         3         0.05
 12/1/96        6,500     6,917.30               250        250             0      1.171676                1         3         0.05
12/31/96        6,500     6,854.01                 0          0             0      1.160957                2         3         0.05
  1/1/97        6,750     7,104.01               250        250             0      1.160957                2         3         0.05
  2/1/97        7,000     7,378.64               250        250             0      1.164981                3         3         0.05
  3/1/97        7,250     7,648.10               250        250             0      1.168054                4         3         0.05
  4/1/97        7,500     7,840.08               250        250             0      1.159193                5         3         0.05
  5/1/97        7,750     8,175.23               250        250             0      1.171782                6         3         0.05
  6/1/97        8,000     8,483.41               250        250             0      1.180121                7         3         0.05
  7/1/97        8,250     8,815.23               250        250             0      1.191503                8         3         0.05
  8/1/97        8,500     9,164.48               250        250             0      1.204919                9         3         0.05
  9/1/97        8,750     9,413.09               250        250             0      1.204736               10         3         0.05
 10/1/97        9,000     9,792.81               250        250             0      1.221338               11         3         0.05
 11/1/97        9,250    10,087.09               250        250           -30      1.230602                0         4         0.04
 12/1/97        9,500    10,360.30               250        250             0      1.233434                1         4         0.04
12/31/97        9,500    10,435.60                 0          0             0      1.242399                2         4         0.04


IRR calc (monthly):    0.476%                  9,500                                                                     

<CAPTION> 

                                       amt subject to        amt subject to         amt subject to          amt subject to    
                                        surr charge           surr charge             surr charge            surr charge            
    Govt. Series    FREE      SURR       12/31/94     SURR      12/31/95     SURR       12/31/96      SURR     12/31/97        SURR 
             CSV   WTHDRL      CHG                     CHG                    CHG                      CHG                      CHG 
<S> <C>            <C>        <C>      <C>           <C>     <C>            <C>     <C>              <C>    <C>               <C> 
 0                                        250.00     17.50       250.00     15.00        250.00      12.50      250.00        10.00
 1                                        227.43     15.92       250.00     15.00        250.00      12.50      250.00        10.00
 2       464.01     25.00     33.42         0.00      0.00         0.00      0.00          0.00       0.00        0.00         0.00
 2                                                               250.00     17.50        250.00      15.00      250.00        12.50
 3                                                               250.00     17.50        250.00      15.00      250.00        12.50
 4                                                               250.00     17.50        250.00      15.00      250.00        12.50
 5                                                               250.00     17.50        250.00      15.00      250.00        12.50
 6                                                               250.00     17.50        250.00      15.00      250.00        12.50
 7                                                               250.00     17.50        250.00      15.00      250.00        12.50
 8                                                               250.00     17.50        250.00      15.00      250.00        12.50
 9                                                               250.00     17.50        250.00      15.00      250.00        12.50
10                                                               250.00     17.50        250.00      15.00      250.00        12.50
11                                                               250.00     17.50        250.00      15.00      250.00        12.50
 0                                                               250.00     17.50        250.00      15.00      250.00        12.50
 1                                                               144.46     10.11        250.00      15.00      250.00        12.50
 2     3,498.43    341.58    232.61                                0.00      0.00          0.00       0.00        0.00         0.00
 2                                                                                       250.00      17.50      250.00        15.00
 3                                                                                       250.00      17.50      250.00        15.00
 4                                                                                       250.00      17.50      250.00        15.00
 5                                                                                       250.00      17.50      250.00        15.00
 6                                                                                       250.00      17.50      250.00        15.00
 7                                                                                       250.00      17.50      250.00        15.00
 8                                                                                       250.00      17.50      250.00        15.00
 9                                                                                       250.00      17.50      250.00        15.00
10                                                                                       250.00      17.50      250.00        15.00
11                                                                                       250.00      17.50      250.00        15.00
 0                                                                                       196.48      13.75      250.00        15.00
 1                                                                                         0.00       0.00      250.00        15.00
 2     6,455.26    657.54    393.75                                                        0.00       0.00        0.00         0.00
 2                                                                                                              250.00        17.50
 3                                                                                                              250.00        17.50
 4                                                                                                              250.00        17.50
 5                                                                                                              250.00        17.50
 6                                                                                                              250.00        17.50
 7                                                                                                              250.00        17.50
 8                                                                                                              250.00        17.50
 9                                                                                                              250.00        17.50
10                                                                                                              250.00        17.50
11                                                                                                              250.00        17.50
 0                                                                                                              250.00        17.50
 1                                                                                                              176.90        12.38
 2     9,875.72   1008.71    554.88                                                                               0.00         0.00
                                                                                                                                   
         0.198%                                      33.42                 232.61                   393.75                   554.88

</TABLE> 
<PAGE>
 

                           HYPOTHETICAL PERFORMANCE
                            FOR A CONTRACT BASED ON
             AVERAGE ANNUAL TOTAL RETURNS FOR U.S. GOVERNMENT FUND

<TABLE> 
<CAPTION> 

Period Ending:               12/31/97
1 Year                         -1.60%
since inception - fund          3.10%
since inc sub acct              1.88%

<S>              <C>             <C>         <C>          <C>           <C>          <C>         <C>       <C> 
   10/31/94             1        1000           1000                    12/31/96     1.160957    1000         1000
   10/31/95      1.114091         -30        1084.09                    12/31/97     1.242399     -30      1040.15
   10/31/96      1.155563         -30        1094.45                                                        104.02
   10/31/97      1.230602         -30        1135.52                                                         56.17
   12/31/97      1.242399          -5        1141.40                                                        983.98
                         
# leap yrs              1                     141.40                                                        -1.60%
                                                  40
                                             1101.40

                                               3.10%


    4/19/95      1.046872        1000           1000
    4/19/96      1.114875         -30        1034.96
    4/19/97      1.164871         -30        1051.37
   12/31/97      1.242399         -20        1101.34      1121.34
# LEAP YEARS                        1

                          free                105.14
                          surr chg          49.81037
                          surr value         1051.53

                          return               1.88%
</TABLE> 

                                    Page 1
<PAGE>
 
<TABLE> 
<CAPTION> 
CALCULATION               $10,000 Single Payment

No Premium Tax      Contract Value                                                 Surrender Value
                    -------------------                                            -------------------
                                                                                                         free withdrawal
                                                                                                         AMOUNTS
<S>       <C>        <C>              <C>    <C>       <C>         <C> <C>   <C>     <C>               <C> 
                                           0 :Prem Tax
                      Balanced                         Balanced                        Balanced        Govt. Series
                            CV        Paymts    Fee      UV's
           11/1/94   10,000.00        10,000      0    0.999963     1   0.07
          12/31/94    9,968.28             0      0    0.996791     1   0.07   2       9,335.50                1000
           11/1/95   11,769.67             0    -30    1.179923     2   0.06   0
          12/31/95   12,242.06             0      0    1.227281     2   0.06   2      11,637.06             2242.06
           11/1/96   13,458.04             0    -30    1.352192     3   0.05   0
          12/31/96   14,087.95             0      0    1.415482     3   0.05   2      13,582.95             4087.95
           11/1/97   15,714.74             0    -30    1.581947     4   0.04   0
          12/31/97   16,117.11             0      0    1.622453     4   0.04   2      15,712.11            6117.115

<CAPTION> 
Percent Change      Contract Value         0 :Prem Tax                             Surrender Value
                    -------------------                                            -------------------
<S>       <C>       <C>                                                            <C> 
                      Balanced                                                     Govt. Series
          12/31/94      -0.32%                                                           -6.65%
           11/1/95      18.07%
          12/31/95       4.01%                                                           24.65%
           11/1/96       9.93%
          12/31/96       4.68%                                                           16.72%
           11/1/97      11.55%
          12/31/97       2.56%                                                           15.68%
</TABLE> 
<PAGE>
 
<TABLE> 
<CAPTION> 
CALCULATION                       $250 Per Month              0 :Prem Tax

No Premium Tax

                 Cumulative        Balanced                  Net                Balanced
                   Payments              CV               Paymts      Fee           UV's
<S>              <C>           <C>                   <C>  <C>         <C>       <C>              <C>  <C>    <C> 
      11/1/94           250          250.00          250     250        0       0.999963          0    1     0.07
      12/1/94           500          496.23          250     250        0        0.98487          1    1     0.07
     12/31/94           500          502.23            0       0        0       0.996791          2    1     0.07
       1/1/95           750          752.23          250     250        0       0.996791          2    1     0.07
       2/1/95         1,000        1,011.90          250     250        0       1.009598          3    1     0.07
       3/1/95         1,250        1,292.94          250     250        0       1.040572          4    1     0.07
       4/1/95         1,500        1,568.83          250     250        0       1.061407          5    1     0.07
       5/1/95         1,750        1,855.40          250     250        0       1.086148          6    1     0.07
       6/1/95         2,000        2,171.41          250     250        0       1.124791          7    1     0.07
       7/1/95         2,250        2,463.31          250     250        0       1.146497          8    1     0.07
       8/1/95         2,500        2,731.78          250     250        0       1.155091          9    1     0.07
       9/1/95         2,750        3,013.91          250     250        0       1.168675         10    1     0.07
      10/1/95         3,000        3,309.43          250     250        0       1.186329         11    1     0.07
      11/1/95         3,250        3,511.56          250     250      -30       1.179923          0    2     0.06
      12/1/95         3,500        3,851.99          250     250        0       1.210309          1    2     0.06
     12/31/95         3,500        3,906.01            0       0        0       1.227281          2    2     0.06
       1/1/96         3,750        4,171.77          250     250        0       1.232234          2    2     0.06
       2/1/96         4,000        4,486.60          250     250        0       1.251383          3    2     0.06
       3/1/96         4,250        4,775.88          250     250        0       1.262337          4    2     0.06
       4/1/96         4,500        5,028.15          250     250        0       1.262939          5    2     0.06
       5/1/96         4,750        5,256.29          250     250        0       1.257448          6    2     0.06
       6/1/96         5,000        5,547.42          250     250        0       1.267287          7    2     0.06
       7/1/96         5,250        5,844.65          250     250        0       1.278076          8    2     0.06
       8/1/96         5,500        5,994.75          250     250        0       1.256231          9    2     0.06
       9/1/96         5,750        6,277.18          250     250        0       1.263026         10    2     0.06
      10/1/96         6,000        6,795.51          250     250        0       1.317016         11    2     0.06
      11/1/96         6,250        7,197.01          250     250      -30       1.352192          0    3     0.05
      12/1/96         6,500        7,835.09          250     250        0       1.425106          1    3     0.05
     12/31/96         6,500        7,782.18            0       0        0       1.415482          2    3     0.05
       1/1/97         6,750        8,032.18          250     250        0       1.415482          2    3     0.05
       2/1/97         7,000        8,403.23          250     250        0       1.436815          3    3     0.05
       3/1/97         7,250        8,705.51          250     250        0       1.445753          4    3     0.05
       4/1/97         7,500        8,694.43          250     250        0       1.402395          5    3     0.05
       5/1/97         7,750        9,057.29          250     250        0         1.4206          6    3     0.05
       6/1/97         8,000        9,628.78          250     250        0       1.471024          7    3     0.05
       7/1/97         8,250       10,274.91          250     250        0       1.531542          8    3     0.05
       8/1/97         8,500       10,989.80          250     250        0       1.600837          9    3     0.05
       9/1/97         8,750       10,992.41          250     250        0         1.5648         10    3     0.05
      10/1/97         9,000       11,623.75          250     250        0       1.619085         11    3     0.05
      11/1/97         9,250       11,577.12          250     250      -30       1.581947          0    4     0.04
      12/1/97         9,500       12,110.20          250     250        0       1.620627          1    4     0.04
     12/31/97         9,500       12,123.84            0       0        0       1.622453          2    4     0.04

IRR calc (monthly):                  1.213%        9,500
<CAPTION> 
                                          amt subject to        amt subject to       amt subject to        amt subject to
                                           surr charge           surr charge           surr charge           surr charge
            Balanced        FREE    SURR    12/31/94      SURR     12/31/95     SURR    12/31/96      SURR     12/31/97   SURR
                 CSV      WTHDRL     CHG                   CHG                   CHG                   CHG                 CHG
<S>      <C>            <C>         <C>      <C>          <C>      <C>          <C>      <C>          <C>      <C>        <C> 
    0                                        250.00       17.50    250.00       15.00    250.00       12.50    250.00     10.00
    1                                        227.23       15.91    250.00       15.00    250.00       12.50    250.00     10.00
    2          463.83      25.00    33.41      0.00        0.00      0.00        0.00      0.00        0.00      0.00      0.00
    2                                                              250.00       17.50    250.00       15.00    250.00     12.50
    3                                                              250.00       17.50    250.00       15.00    250.00     12.50
    4                                                              250.00       17.50    250.00       15.00    250.00     12.50
    5                                                              250.00       17.50    250.00       15.00    250.00     12.50
    6                                                              250.00       17.50    250.00       15.00    250.00     12.50
    7                                                              250.00       17.50    250.00       15.00    250.00     12.50
    8                                                              250.00       17.50    250.00       15.00    250.00     12.50
    9                                                              250.00       17.50    250.00       15.00    250.00     12.50
   10                                                              250.00       17.50    250.00       15.00    250.00     12.50
   11                                                              250.00       17.50    250.00       15.00    250.00     12.50
    0                                                              250.00       17.50    250.00       15.00    250.00     12.50
    1                                                              250.00       17.50    250.00       15.00    250.00     12.50
    2        3,661.01     351.16   240.00                            0.00        0.00      0.00        0.00      0.00      0.00
    2                                                                                    250.00       17.50    250.00     15.00
    3                                                                                    250.00       17.50    250.00     15.00
    4                                                                                    250.00       17.50    250.00     15.00
    5                                                                                    250.00       17.50    250.00     15.00
    6                                                                                    250.00       17.50    250.00     15.00
    7                                                                                    250.00       17.50    250.00     15.00
    8                                                                                    250.00       17.50    250.00     15.00
    9                                                                                    250.00       17.50    250.00     15.00
   10                                                                                    250.00       17.50    250.00     15.00
   11                                                                                    250.00       17.50    250.00     15.00
    0                                                                                    250.00       17.50    250.00     15.00
    1                                                                                    250.00       17.50    250.00     15.00
    2        7,362.18     719.70   415.00                                                  0.00        0.00      0.00      0.00
    2                                                                                                          250.00     17.50
    3                                                                                                          250.00     17.50
    4                                                                                                          250.00     17.50
    5                                                                                                          250.00     17.50
    6                                                                                                          250.00     17.50
    7                                                                                                          250.00     17.50
    8                                                                                                          250.00     17.50
    9                                                                                                          250.00     17.50
   10                                                                                                          250.00     17.50
   11                                                                                                          250.00     17.50
    0                                                                                                          250.00     17.50
    1                                                                                                          250.00     17.50
    2       11,558.84    2077.12   560.00                                                                        0.00      0.00

               0.981%                                     33.41                240.00                415.00              560.00
</TABLE> 
<PAGE>
 
                           
                           HYPOTHETICAL PERFORMANCE
                            FOR A CONTRACT BASED ON
                AVERAGE ANNUAL TOTAL RETURNS FOR BALANCED FUND

<TABLE> 
<CAPTION> 

Period Ending:             12/31/97
1 Year                        5.62%
since inception - fund       12.92%
since inc sub acct           12.27%

<S>             <C>            <C>         <C>          <C>           <C>          <C>          <C>      <C> 
  10/31/94             1       1000           1000                    12/31/96     1.415482     1000        1000
  10/31/95      1.178975        -30        1148.98                    12/31/97     1.622453      -30     1116.22
  10/31/96       1.35428        -30        1289.82                                                        116.22
  10/31/97      1.581947        -30        1476.65                                                            60
  12/31/97      1.622453         -5        1509.46                                                       1056.22
                               
                                            509.46                                                         5.62%
                                                40
                                           1469.46
                               
                                            12.92%
                               
                               
   4/19/95      1.073645       1000           1000
   4/19/96      1.246755        -30        1131.24
   4/19/97       1.39319        -30        1234.10
  12/31/97      1.622453        -20        1417.19      1437.19
# LEAP YEARS                      1
                         
                          free              417.19
                          surr chg              50
                          surr value       1367.19

                          return            12.27%
</TABLE> 

                                    Page 1
<PAGE>
 
<TABLE> 
<CAPTION> 

CALCULATION             $10,000 Single Payment

No Premium Tax    Contract Value                                                                Surrender Value
                  -----------------------                                                       --------------------
                                                                                                                     free withdrawal
                                                                                                                     AMOUNTS
                                             0 :Prem Tax
                   Equity Growth                       Equity Growth                             Equity Growth         Govt. Series
                              CV         Paymts    Fee      UV's
           <S>         <C>              <C>        <C>    <C>               <C>   <C>     <C>     <C>                     <C> 
            11/1/94    10,000.00        10,000       0    0.985963          1     0.07
           12/31/94     9,695.00              0      0    0.955891          1     0.07    2        9,081.35                   1000
            11/1/95    14,459.39              0    -30      1.4286          2     0.06    0
           12/31/95    14,193.95              0      0    1.402375          2     0.06    2       13,588.95               4193.955
            11/1/96    15,376.95              0    -30     1.52222          3     0.05    0
           12/31/96    15,815.92              0      0    1.565675          3     0.05    2       15,310.92               5815.918
            11/1/97    19,299.14              0    -30    1.913462          4     0.04    0
           12/31/97    19,572.63              0      0    1.940577          4     0.04    2       19,167.63               9572.625

<CAPTION> 

Percent Change    Contract Value             0 :Prem Tax                                        Surrender Value
                  -----------------------                                                       --------------------

                   Equity Growth                                                                 Govt. Series
           <S>            <C>                                                                        <C> 
           12/31/94       -3.05%                                                                     -9.19%
            11/1/95       49.14%
           12/31/95       -1.84%                                                                     49.64%
            11/1/96        8.33%
           12/31/96        2.85%                                                                     12.67%
            11/1/97       22.02%
           12/31/97        1.42%                                                                     25.19%
</TABLE> 
<PAGE>
 
<TABLE> 
<CAPTION> 

CALCULATION            $250 Per Month              0 :Prem Tax

No Premium Tax

         Cumulative  Equity Growth                Net          Equity Growth
           Payments             CV             Paymts    Fee            UV's
<S>      <C>         <C>  <C>          <C>     <C>       <C>   <C>                     <C>          <C>         <C> 
 11/1/94        250         250.00     250        250      0        0.985963            0           1           0.07                
 12/1/94        500         487.31     250        250      0        0.935925            1           1           0.07                
12/31/94        500         497.71       0          0      0        0.955891            2           1           0.07                
  1/1/95        750         747.71     250        250      0        0.955891            2           1           0.07                
  2/1/95      1,000       1,009.29     250        250      0        0.970703            3           1           0.07                
  3/1/95      1,250       1,311.15     250        250      0        1.020578            4           1           0.07                
  4/1/95      1,500       1,637.80     250        250      0        1.080239            5           1           0.07                
  5/1/95      1,750       1,964.40     250        250      0        1.130763            6           1           0.07                
  6/1/95      2,000       2,293.33     250        250      0        1.176199            7           1           0.07                
  7/1/95      2,250       2,701.61     250        250      0        1.257376            8           1           0.07                
  8/1/95      2,500       3,182.89     250        250      0        1.365018            9           1           0.07                
  9/1/95      2,750       3,533.22     250        250      0        1.408043           10           1           0.07                
 10/1/95      3,000       3,916.19     250        250      0        1.461034           11           1           0.07                
 11/1/95      3,250       4,049.25     250        250    -30          1.4286            0           2           0.06                
 12/1/95      3,500       4,247.16     250        250      0        1.410223            1           2           0.06                
12/31/95      3,500       4,223.53       0          0      0        1.402375            2           2           0.06                
  1/1/96      3,750       4,479.03     250        250      0        1.404202            2           2           0.06                
  2/1/96      4,000       4,873.09     250        250      0        1.449366            3           2           0.06                
  3/1/96      4,250       5,145.15     250        250      0        1.455928            4           2           0.06                
  4/1/96      4,500       5,421.50     250        250      0        1.463383            5           2           0.06                
  5/1/96      4,750       5,811.76     250        250      0        1.501242            6           2           0.06                
  6/1/96      5,000       6,074.88     250        250      0        1.504632            7           2           0.06                
  7/1/96      5,250       6,240.44     250        250      0        1.483718            8           2           0.06                
  8/1/96      5,500       6,105.60     250        250      0        1.392218            9           2           0.06                
  9/1/96      5,750       6,477.22     250        250      0         1.41995           10           2           0.06                
 10/1/96      6,000       7,151.19     250        250      0        1.512894           11           2           0.06                
 11/1/96      6,250       7,415.27     250        250    -30         1.52222            0           3           0.05                
 12/1/96      6,500       8,122.43     250        250      0        1.616066            1           3           0.05                
12/31/96      6,500       7,869.16       0          0      0        1.565675            2           3           0.05                
  1/1/97      6,750       8,119.16     250        250      0        1.565675            2           3           0.05                
  2/1/97      7,000       8,948.07     250        250      0        1.677311            3           3           0.05                
  3/1/97      7,250       8,883.87     250        250      0        1.618414            4           3           0.05                
  4/1/97      7,500       8,842.94     250        250      0        1.565414            5           3           0.05                
  5/1/97      7,750       9,399.63     250        250      0        1.619706            6           3           0.05                
  6/1/97      8,000      10,225.37     250        250      0        1.718914            7           3           0.05                
  7/1/97      8,250      11,122.40     250        250      0        1.827682            8           3           0.05                
  8/1/97      8,500      12,383.55     250        250      0        1.993839            9           3           0.05                
  9/1/97      8,750      12,174.49     250        250      0        1.919926           10           3           0.05                
 10/1/97      9,000      13,073.31     250        250      0        2.022246           11           3           0.05                
 11/1/97      9,250      12,590.05     250        250    -30        1.913462            0           4           0.04                
 12/1/97      9,500      13,322.94     250        250      0        1.986853            1           4           0.04                
12/31/97      9,500      13,012.63       0          0      0        1.940577            2           4           0.04                


IRR calc (monthly):         1.552%   9,500                                                

<CAPTION> 

                                       amt subject to          amt subject to          amt subject to         amt subject to 
                                         surr charge            surr charge              surr charge            surr charge      
     Equity Growth      FREE      SURR    12/31/94       SURR    12/31/95        SURR     12/31/96       SURR     12/31/97      SURR
               CSV    WTHDRL       CHG                    CHG                     CHG                     CHG                    CHG
 <S> <C>              <C>         <C>  <C>              <C>    <C>              <C>    <C>              <C>   <C>              <C> 
  0                                         250.00      17.50     250.00        15.00      250.00       12.50      250.00      10.00
  1                                         222.71      15.59     250.00        15.00      250.00       12.50      250.00      10.00
  2         459.62     25.00     33.09        0.00       0.00       0.00         0.00        0.00        0.00        0.00       0.00
  2                                                               250.00        17.50      250.00       15.00      250.00      12.50
  3                                                               250.00        17.50      250.00       15.00      250.00      12.50
  4                                                               250.00        17.50      250.00       15.00      250.00      12.50
  5                                                               250.00        17.50      250.00       15.00      250.00      12.50
  6                                                               250.00        17.50      250.00       15.00      250.00      12.50
  7                                                               250.00        17.50      250.00       15.00      250.00      12.50
  8                                                               250.00        17.50      250.00       15.00      250.00      12.50
  9                                                               250.00        17.50      250.00       15.00      250.00      12.50
 10                                                               250.00        17.50      250.00       15.00      250.00      12.50
 11                                                               250.00        17.50      250.00       15.00      250.00      12.50
  0                                                               250.00        17.50      250.00       15.00      250.00      12.50
  1                                                               250.00        17.50      250.00       15.00      250.00      12.50
  2       3,978.53    723.53    240.00                              0.00         0.00        0.00        0.00        0.00       0.00
  2                                                                                        250.00       17.50      250.00      15.00
  3                                                                                        250.00       17.50      250.00      15.00
  4                                                                                        250.00       17.50      250.00      15.00
  5                                                                                        250.00       17.50      250.00      15.00
  6                                                                                        250.00       17.50      250.00      15.00
  7                                                                                        250.00       17.50      250.00      15.00
  8                                                                                        250.00       17.50      250.00      15.00
  9                                                                                        250.00       17.50      250.00      15.00
 10                                                                                        250.00       17.50      250.00      15.00
 11                                                                                        250.00       17.50      250.00      15.00
  0                                                                                        250.00       17.50      250.00      15.00
  1                                                                                        250.00       17.50      250.00      15.00
  2       7,449.16   1369.16    415.00                                                       0.00        0.00        0.00       0.00
  2                                                                                                                250.00      17.50
  3                                                                                                                250.00      17.50
  4                                                                                                                250.00      17.50
  5                                                                                                                250.00      17.50
  6                                                                                                                250.00      17.50
  7                                                                                                                250.00      17.50
  8                                                                                                                250.00      17.50
  9                                                                                                                250.00      17.50
 10                                                                                                                250.00      17.50
 11                                                                                                                250.00      17.50
  0                                                                                                                250.00      17.50
  1                                                                                                                250.00      17.50
  2      12,447.63   3512.63    560.00                                                                               0.00       0.00
                                                                                                                                    

            1.340%                                      33.09                  240.00                  415.00                 560.00

</TABLE> 
<PAGE>
 

                           HYPOTHETICAL PERFORMANCE
                            FOR A CONTRACT BASED ON
              AVERAGE ANNUAL TOTAL RETURNS FOR EQUITY GROWTH FUND

<TABLE> 
<CAPTION> 

Period Ending:               12/31/97
1 Year                         14.95%
since inception - fund         20.10%
since inc sub acct             19.83%

<S>              <C>             <C>         <C>          <C>           <C>          <C>       <C>         <C> 
   10/31/94             1        1000           1000                    12/31/96     1.565675  1000           1000
   10/31/95       1.43063         -30        1400.63                    12/31/97     1.940577   -30        1209.45
   10/31/96       1.52127         -30        1459.37                                                        209.45
   10/31/97      1.913462         -30        1805.60                                                            60
   12/31/97      1.940577          -5        1826.19                                                       1149.45
                                 
                                              826.19                                                        14.95%
                                                  40
                                             1786.19
                                 
                                              20.10%
                                 
                                 
    4/19/95       1.09143        1000           1000
    4/19/96      1.435063         -30        1284.85
    4/19/97      1.563431         -30        1369.78
   12/31/97      1.940577         -20        1680.21      1700.21
# LEAP YEARS                        1

                          free                680.21
                          surr chg                50
                          surr value         1630.21

                          return              19.83%
</TABLE> 

                                    Page 1
<PAGE>
 
<TABLE> 
<CAPTION> 

CALCULATION                     $10,000 Single Payment


No Premium Tax    Contract Value                                                          Surrender Value
                  ----------------------                                                  ---------------------
                                                                                                                     free withdrawal
                                                                                                                     AMOUNTS
                                              0 :Prem Tax
            International Equity                     International Equity               International Equity
                              CV         Paymts   Fee        UV's
            <S>        <C>              <C>       <C>     <C>             <C>  <C>    <C>     <C>                         <C> 
             11/1/94   10,000.00        10,000      0     0.999963        1    0.07
            12/31/94   10,237.83              0     0     1.023745        1    0.07   2       9,586.53                       1000
             11/1/95   10,092.60              0   -30     1.012223        2    0.06   0
            12/31/95   10,698.65              0     0     1.073005        2    0.06   2      10,112.58                    1009.26
             11/1/96   11,019.75              0   -30     1.108219        3    0.05   0
            12/31/96   11,227.90              0     0     1.129151        3    0.05   2      10,723.15                   1227.896
             11/1/97   11,140.40              0   -30     1.123369        4    0.04   0
            12/31/97   10,904.04              0     0     1.099535        4    0.04   2      10,507.64                    1114.04

<CAPTION> 

Percent Change    Contract Value              0 :Prem Tax
                  ----------------------      

             International Equity
            <S>            <C> 
            12/31/94       2.38%
             11/1/95      -1.42%
            12/31/95       6.00%
             11/1/96       3.00%
            12/31/96       1.89%
             11/1/97      -0.78%
            12/31/97      -2.12%
</TABLE> 
<PAGE>
 
<TABLE> 
<CAPTION> 

CALCULATION             $250 Per Month               0 :Prem Tax

No Premium Tax

                                                                                                                                   
          Cumulative International Equity                   Net           International Equity                                    
            Payments          CV                         Paymts       Fee          UV's                                            
<S>       <C>        <C>                        <C>      <C>          <C> <C>                         <C>          <C>         <C> 
 11/1/94         250      250.00                250         250         0      0.999963                0           1           0.07
 12/1/94         500      500.47                250         250         0      1.001851                1           1           0.07
12/31/94         500      511.41                  0           0         0      1.023745                2           1           0.07
  1/1/95         750      761.41                250         250         0      1.023745                2           1           0.07
  2/1/95       1,000      983.72                250         250         0      0.986512                3           1           0.07
  3/1/95       1,250    1,223.74                250         250         0      0.976503                4           1           0.07
  4/1/95       1,500    1,512.38                250         250         0      1.007338                5           1           0.07
  5/1/95       1,750    1,811.50                250         250         0      1.040057                6           1           0.07
  6/1/95       2,000    2,062.89                250         250         0      1.040855                7           1           0.07
  7/1/95       2,250    2,279.16                250         250         0      1.023835                8           1           0.07
  8/1/95       2,500    2,650.24                250         250         0      1.078227                9           1           0.07
  9/1/95       2,750    2,821.64                250         250         0      1.046247               10           1           0.07
 10/1/95       3,000    3,087.41                250         250         0      1.052097               11           1           0.07
 11/1/95       3,250    3,190.40                250         250       -30      1.012223                0           2           0.06
 12/1/95       3,500    3,545.90                250         250         0      1.045695                1           2           0.06
12/31/95       3,500    3,638.51                  0           0         0      1.073005                2           2           0.06
  1/1/96       3,750    3,904.89                250         250         0      1.077837                2           2           0.06
  2/1/96       4,000    4,128.89                250         250         0      1.070659                3           2           0.06
  3/1/96       4,250    4,385.98                250         250         0      1.072497                4           2           0.06
  4/1/96       4,500    4,728.58                250         250         0      1.095141                5           2           0.06
  5/1/96       4,750    5,089.17                250         250         0      1.120755                6           2           0.06
  6/1/96       5,000    5,360.57                250         250         0      1.125468                7           2           0.06
  7/1/96       5,250    5,661.10                250         250         0      1.136075                8           2           0.06
  8/1/96       5,500    5,761.50                250         250         0      1.106054                9           2           0.06
  9/1/96       5,750    6,025.94                250         250         0      1.108826               10           2           0.06
 10/1/96       6,000    6,338.61                250         250         0      1.120358               11           2           0.06
 11/1/96       6,250    6,489.93                250         250       -30      1.108219                0           3           0.05
 12/1/96       6,500    6,877.55                250         250         0      1.131718                1           3           0.05
12/31/96       6,500    6,861.95                  0           0         0      1.129151                2           3           0.05
  1/1/97       6,750    7,111.95                250         250         0      1.129151                2           3           0.05
  2/1/97       7,000    7,014.01                250         250         0      1.073909                3           3           0.05
  3/1/97       7,250    7,361.04                250         250         0      1.088766                4           3           0.05
  4/1/97       7,500    7,534.93                250         250         0      1.077509                5           3           0.05
  5/1/97       7,750    7,922.79                250         250         0      1.097223                6           3           0.05
  6/1/97       8,000    8,616.76                250         250         0      1.158708                7           3           0.05
  7/1/97       8,250    9,285.08                250         250         0       1.21496                8           3           0.05
  8/1/97       8,500    9,654.14                250         250         0      1.230539                9           3           0.05
  9/1/97       8,750    9,239.72                250         250         0      1.145851               10           3           0.05
 10/1/97       9,000    9,926.30                250         250         0      1.199993               11           3           0.05
 11/1/97       9,250    9,512.47                250         250       -30      1.123369                0           4           0.04
 12/1/97       9,500    9,701.32                250         250         0      1.116147                1           4           0.04
12/31/97       9,500    9,556.93                  0           0         0      1.099535                2           4           0.04

IRR calc (monthly):       0.031%              9,500                                                                       

<CAPTION> 

                                         amt subject to        amt subject to       amt subject to           amt subject to        
                                          surr charge           surr charge           surr charge              surr charge         
     International Equity   FREE  SURR      12/31/94      SURR    12/31/95     SURR     12/31/96      SURR       12/31/97      SURR
                   CSV    WTHDRL   CHG                     CHG                  CHG                    CHG                      CHG
<S>  <C>                  <C>     <C>    <C>             <C>   <C>            <C>   <C>               <C>    <C>              <C> 
  0                                          250.00      17.50     250.00     15.00      250.00       12.50       250.00      10.00
  1                                          236.41      16.55     250.00     15.00      250.00       12.50       250.00      10.00
  2             472.36     25.00  34.05        0.00       0.00       0.00      0.00        0.00        0.00         0.00       0.00
  2                                                                250.00     17.50      250.00       15.00       250.00      12.50
  3                                                                250.00     17.50      250.00       15.00       250.00      12.50
  4                                                                250.00     17.50      250.00       15.00       250.00      12.50
  5                                                                250.00     17.50      250.00       15.00       250.00      12.50
  6                                                                250.00     17.50      250.00       15.00       250.00      12.50
  7                                                                250.00     17.50      250.00       15.00       250.00      12.50
  8                                                                250.00     17.50      250.00       15.00       250.00      12.50
  9                                                                250.00     17.50      250.00       15.00       250.00      12.50
 10                                                                250.00     17.50      250.00       15.00       250.00      12.50
 11                                                                250.00     17.50      250.00       15.00       250.00      12.50
  0                                                                250.00     17.50      250.00       15.00       250.00      12.50
  1                                                                 69.47      4.86      250.00       15.00       250.00      12.50
  2           3,406.14   319.04   227.36                             0.00      0.00        0.00        0.00         0.00       0.00
  2                                                                                      250.00       17.50       250.00      15.00
  3                                                                                      250.00       17.50       250.00      15.00
  4                                                                                      250.00       17.50       250.00      15.00
  5                                                                                      250.00       17.50       250.00      15.00
  6                                                                                      250.00       17.50       250.00      15.00
  7                                                                                      250.00       17.50       250.00      15.00
  8                                                                                      250.00       17.50       250.00      15.00
  9                                                                                      250.00       17.50       250.00      15.00
 10                                                                                      250.00       17.50       250.00      15.00
 11                                                                                      250.00       17.50       250.00      15.00
  0                                                                                      212.95       14.91       250.00      15.00
  1                                                                                        0.00        0.00       250.00      15.00
  2           6,462.04   648.99   394.91                                                   0.00        0.00         0.00       0.00
  2                                                                                                               250.00      17.50
  3                                                                                                               250.00      17.50
  4                                                                                                               250.00      17.50
  5                                                                                                               250.00      17.50
  6                                                                                                               250.00      17.50
  7                                                                                                               250.00      17.50
  8                                                                                                               250.00      17.50
  9                                                                                                               250.00      17.50
 10                                                                                                               105.68       7.40
 11                                                                                                                 0.00       0.00
  0                                                                                                                 0.00       0.00
  1                                                                                                                 0.00       0.00
  2           9,054.53   951.25   497.40                                                                            0.00       0.00
                                                                                                                                  
               -0.248%                                   34.05               227.36                  394.91                  497.40

</TABLE> 
<PAGE>
 

                           HYPOTHETICAL PERFORMANCE
                            FOR A CONTRACT BASED ON
          AVERAGE ANNUAL TOTAL RETURNS FOR INTERNATIONAL EQUITY FUND

<TABLE> 
<CAPTION> 

Period Ending:               12/31/97
1 Year                        -10.72%
since inception - fund         -1.06%
since inc sub acct             -2.33%

<S>              <C>             <C>         <C>          <C>           <C>          <C>       <C>          <C> 
   10/31/94             1        1000           1000                    12/31/96     1.129151  1000           1000
   10/31/95      1.018198         -30         988.20                    12/31/97     1.099535   -30         943.77
   10/31/96      1.104312         -30        1041.77                                                         94.38
   10/31/97      1.123369         -30        1029.75                                                         50.96
   12/31/97      1.099535          -5        1002.90                                                        892.81
                                 
                                              102.98                                                       -10.72%
                                                  36
                                              966.90
                                 
                                              -1.06%
                                 
                                 
    4/19/95      1.034539        1000           1000
    4/19/96      1.110317         -30        1043.25
    4/19/97      1.080815         -30         985.53
   12/31/97      1.099535         -20         982.60      1002.60
# LEAP YEARS                        1

                          free                 98.55
                          surr chg          44.20225
                          surr value          938.40

                          return              -2.33%
</TABLE> 

                                    Page 1
<PAGE>
 
<TABLE> 
<CAPTION> 

CALCULATION                     $10,000 Single Payment

No Premium Tax      Contract Value                                                         Surrender Value
                    ----------------------                                                 ------------------------
                                                                                                                     free withdrawal
                                                                                                                     AMOUNTS
                                              0 :Prem Tax
                    Venture Value                      Venture Value                       Venture Value            Venture Value
                              CV        Paymts    Fee      UV's
            <S>        <C>              <C>       <C>    <C>              <C>  <C>    <C>  <C>                      <C> 
             11/1/94   10,000.00        10,000      0    0.999963         1    0.07
            12/31/94    9,628.96              0     0     0.96286         1    0.07   2       9,019.93                       1000
             11/1/95   12,746.80              0   -30    1.277633         2    0.06   0
            12/31/95   13,201.25              0     0    1.323183         2    0.06   2      12,596.25                   3201.252
             11/1/96   15,294.39              0   -30    1.535989         3    0.05   0
            12/31/96   16,356.08              0     0    1.642613         3    0.05   2      15,851.08                   6356.085
             11/1/97   20,834.70              0   -30    2.095405         4    0.04   0
            12/31/97   21,511.41              0     0    2.163463         4    0.04   2      21,106.41                   11511.41

<CAPTION> 

Percent Change      Contract Value            0 :Prem Tax
                    ----------------------                                           

                   Venture Value
            <S>           <C> 
            12/31/94      -3.71%
             11/1/95      32.38%
            12/31/95       3.57%
             11/1/96      15.86%
            12/31/96      63.56%
             11/1/97      27.38%
            12/31/97       3.25%
</TABLE> 
<PAGE>
 
CALCULATION              $250 Per Month               0 :Prem Tax

No Premium Tax

<TABLE> 
<CAPTION> 

           Cumulative  Venture Value                    Net                Venture Value                                            
             Payments           CV                   Paymts           Fee           UV's                                            
<S>        <C>         <C>                       <C> <C>              <C>  <C>                         <C>          <C>         <C> 
 11/1/94          250       250.00               250    250             0       0.999963                0           1           0.07
 12/1/94          500       486.74               250    250             0       0.946912                1           1           0.07
12/31/94          500       494.93                 0      0             0        0.96286                2           1           0.07
  1/1/95          750       744.93               250    250             0        0.96286                2           1           0.07
  2/1/95        1,000     1,015.68               250    250             0       0.989679                3           1           0.07
  3/1/95        1,250     1,315.88               250    250             0       1.038588                4           1           0.07
  4/1/95        1,500     1,584.64               250    250             0       1.053398                5           1           0.07
  5/1/95        1,750     1,897.28               250    250             0       1.095038                6           1           0.07
  6/1/95        2,000     2,234.78               250    250             0       1.145539                7           1           0.07
  7/1/95        2,250     2,540.57               250    250             0       1.174139                8           1           0.07
  8/1/95        2,500     2,901.46               250    250             0       1.225383                9           1           0.07
  9/1/95        2,750     3,244.43               250    250             0       1.264648               10           1           0.07
 10/1/95        3,000     3,592.76               250    250             0       1.302976               11           1           0.07
 11/1/95        3,250     3,742.88               250    250           -30       1.277633                0           2           0.06
 12/1/95        3,500     4,110.36               250    250             0       1.317735                1           2           0.06
12/31/95        3,500     4,127.35                 0      0             0       1.323183                2           2           0.06
  1/1/96        3,750     4,401.95               250    250             0       1.331068                2           2           0.06
  2/1/96        4,000     4,733.81               250    250             0       1.355822                3           2           0.06
  3/1/96        4,250     5,077.24               250    250             0       1.382583                4           2           0.06
  4/1/96        4,500     5,402.77               250    250             0       1.403148                5           2           0.06
  5/1/96        4,750     5,635.15               250    250             0       1.398574                6           2           0.06
  6/1/96        5,000     5,959.84               250    250             0       1.417111                7           2           0.06
  7/1/96        5,250     6,257.87               250    250             0        1.42853                8           2           0.06
  8/1/96        5,500     6,360.20               250    250             0       1.394822                9           2           0.06
  9/1/96        5,750     6,694.67               250    250             0       1.413346               10           2           0.06
 10/1/96        6,000     7,282.60               250    250             0       1.484688               11           2           0.06
 11/1/96        6,250     7,754.24               250    250           -30       1.535989                0           3           0.05
 12/1/96        6,500     8,646.81               250    250             0       1.663272                1           3           0.05
12/31/96        6,500     8,539.41                 0      0             0       1.642613                2           3           0.05
  1/1/97        6,750     8,789.41               250    250             0       1.642613                2           3           0.05
  2/1/97        7,000     9,580.45               250    250             0       1.743726                3           3           0.05
  3/1/97        7,250     9,848.53               250    250             0       1.747016                4           3           0.05
  4/1/97        7,500     9,731.24               250    250             0       1.681862                5           3           0.05
  5/1/97        7,750    10,405.63               250    250             0        1.75521                6           3           0.05
  6/1/97        8,000    11,228.35               250    250             0       1.851816                7           3           0.05
  7/1/97        8,250    12,104.53               250    250             0       1.955088                8           3           0.05
  8/1/97        8,500    13,329.81               250    250             0       2.112612                9           3           0.05
  9/1/97        8,750    13,060.97               250    250             0       2.030383               10           3           0.05
 10/1/97        9,000    14,239.01               250    250             0        2.17465               11           3           0.05
 11/1/97        9,250    13,940.13               250    250           -30       2.095405                0           4           0.04
 12/1/97        9,500    14,617.53               250    250             0       2.159649                1           4           0.04
12/31/97        9,500    14,643.35                 0      0             0       2.163463                2           4           0.04

IRR calc (monthly):         2.107%             9,500                                                                                

<CAPTION> 

                                              amt subject to       amt subject to       amt subject to        amt subject to      
                                                surr charge          surr charge          surr charge           surr charge         
       Venture             FREE       SURR        12/31/94    SURR     12/31/95    SURR     12/31/96     SURR     12/31/97     SURR
                   CSV   WTHDRL        CHG                     CHG                  CHG                   CHG                   CHG
  <S>  <C>               <C>         <C>      <C>            <C>   <C>            <C>   <C>             <C>   <C>             <C> 
   0                                              250.00     17.50     250.00     15.00      250.00     12.50      250.00     10.00
   1                                              219.93     15.40     250.00     15.00      250.00     12.50      250.00     10.00
   2            457.04     25.00     32.90          0.00      0.00       0.00      0.00        0.00      0.00        0.00      0.00
   2                                                                   250.00     17.50      250.00     15.00      250.00     12.50
   3                                                                   250.00     17.50      250.00     15.00      250.00     12.50
   4                                                                   250.00     17.50      250.00     15.00      250.00     12.50
   5                                                                   250.00     17.50      250.00     15.00      250.00     12.50
   6                                                                   250.00     17.50      250.00     15.00      250.00     12.50
   7                                                                   250.00     17.50      250.00     15.00      250.00     12.50
   8                                                                   250.00     17.50      250.00     15.00      250.00     12.50
   9                                                                   250.00     17.50      250.00     15.00      250.00     12.50
  10                                                                   250.00     17.50      250.00     15.00      250.00     12.50
  11                                                                   250.00     17.50      250.00     15.00      250.00     12.50
   0                                                                   250.00     17.50      250.00     15.00      250.00     12.50
   1                                                                   250.00     17.50      250.00     15.00      250.00     12.50
   2          3,882.35    374.29    240.00                               0.00      0.00        0.00      0.00        0.00      0.00
   2                                                                               0.00      250.00     17.50      250.00     15.00
   3                                                                               0.00      250.00     17.50      250.00     15.00
   4                                                                               0.00      250.00     17.50      250.00     15.00
   5                                                                               0.00      250.00     17.50      250.00     15.00
   6                                                                               0.00      250.00     17.50      250.00     15.00
   7                                                                               0.00      250.00     17.50      250.00     15.00
   8                                                                               0.00      250.00     17.50      250.00     15.00
   9                                                                               0.00      250.00     17.50      250.00     15.00
  10                                                                               0.00      250.00     17.50      250.00     15.00
  11                                                                               0.00      250.00     17.50      250.00     15.00
   0                                                                               0.00      250.00     17.50      250.00     15.00
   1                                                                               0.00      250.00     17.50      250.00     15.00
   2          8,119.41   1254.24    415.00                                         0.00        0.00      0.00        0.00      0.00
   2                                                                                                               250.00     17.50
   3                                                                                                               250.00     17.50
   4                                                                                                               250.00     17.50
   5                                                                                                               250.00     17.50
   6                                                                                                               250.00     17.50
   7                                                                                                               250.00     17.50
   8                                                                                                               250.00     17.50
   9                                                                                                               250.00     17.50
  10                                                                                                               250.00     17.50
  11                                                                                                               250.00     17.50
   0                                                                                                               250.00     17.50
   1                                                                                                               250.00     17.50
   2         14,078.35   4440.13    560.00                                                                           0.00      0.00
                                                                                                                                   
                1.924%                                       32.90               240.00                415.00                560.00

</TABLE> 
<PAGE>
 


                           HYPOTHETICAL PERFORMANCE
                            FOR A CONTRACT BASED ON
              AVERAGE ANNUAL TOTAL RETURNS FOR VENTURE VALUE FUND

<TABLE> 
<CAPTION> 

Period Ending:               12/31/97
1 Year                         22.71%
since inception - fund         24.35%
since inc sub acct             25.90%

<S>              <C>             <C>         <C>          <C>           <C>          <C>         <C>       <C> 
   10/31/94             1        1000           1000                    12/31/96     1.642613    1000         1000
   10/31/95      1.268772         -30        1238.77                    12/31/97     2.163463     -30      1287.09
   10/31/96      1.538046         -30        1471.68                                                        287.09
   10/31/97      2.095405         -30        1974.99                                                            60
   12/31/97      2.163463          -5        2034.13                                                       1227.09
                                 
                                             1034.13                                                        22.71%
                                                  40
                                             1994.13
                                 
                                              24.35%
                                 
                                 
    4/19/95      1.071598        1000           1000
    4/19/96      1.375052         -30        1253.18
    4/19/97      1.678773         -30        1499.98
   12/31/97      2.163463         -20        1913.05      1933.05
# LEAP YEARS                        1

                          free                913.05
                          surr chg                50
                          surr value         1863.05

                          return              25.90%
</TABLE> 

                                    Page 1
<PAGE>
 
<TABLE> 
<CAPTION> 

CALCULATION                 $10,000 Single Payment

No Premium Tax       Contract Value                                                        Surrender Value
                     ----------------------------                                          ---------------------------------
                                                                                                                     free withdrawal
                                                                                                                     AMOUNTS
                                            0 :Prem Tax
                          Bond                            Bond                                          Bond                Bond
                            CV         Paymts     Fee     UV's
          <S>        <C>               <C>       <C>     <C>                <C>   <C>     <C>      <C>               <C>  
           11/1/94   10,000.00         10,000       0    0.999963           1     0.07
          12/31/94    9,838.86               0      0     0.98385           1     0.07    2         9,215.14                1000
           11/1/95   11,246.35               0    -30    1.127593           2     0.06    0
          12/31/95   11,557.83               0      0    1.158823           2     0.06    2        10,952.83            1557.828
           11/1/96   12,768.86               0    -30    1.283253           3     0.05    0
          12/31/96   13,008.06               0      0    1.307292           3     0.05    2        12,503.06            3008.061
           11/1/97   13,998.31               0    -30    1.409826           4     0.04    0
          12/31/97   14,224.45               0      0    1.432601           4     0.04    2        13,819.45            4224.449

<CAPTION> 

Percent Change       Contract Value              0 :Prem Tax
                     ------------------
         
                          Bond
          <C>           <C> 
          12/31/94      -1.61%
           11/1/95      14.31%
          12/31/95       2.77%
           11/1/96      10.48%
          12/31/96       1.87%
           11/1/97       7.61%
          12/31/97       1.62%
</TABLE> 
<PAGE>
 
<TABLE> 
<CAPTION> 

CALCULATION               $250 Per Month                0 :Prem Tax

No Premium Tax                                          


            Cumulative Bond                               Net                    Bond
              Payments            CV                   Paymts           Fee        UV's                                             
<S>         <C>             <C>                 <C>    <C>              <C>    <C>                   <C>          <C>         <C> 
 11/1/94        250           250.00            250       250             0    0.999963               0           1           0.07  
 12/1/94        500           499.72            250       250             0    0.998854               1           1           0.07  
12/31/94        500           492.22              0         0             0     0.98385               2           1           0.07  
  1/1/95        750           742.22            250       250             0     0.98385               2           1           0.07  
  2/1/95      1,000           997.40            250       250             0    0.990721               3           1           0.07  
  3/1/95      1,250         1,250.43            250       250             0    0.993727               4           1           0.07  
  4/1/95      1,500         1,511.71            250       250             0    1.002693               5           1           0.07  
  5/1/95      1,750         1,823.65            250       250             0     1.04378               6           1           0.07  
  6/1/95      2,000         2,155.80            250       250             0    1.090798               7           1           0.07  
  7/1/95      2,250         2,419.35            250       250             0    1.097656               8           1           0.07  
  8/1/95      2,500         2,679.75            250       250             0    1.102372               9           1           0.07  
  9/1/95      2,750         2,953.45            250       250             0     1.11212              10           1           0.07  
 10/1/95      3,000         3,229.60            250       250             0    1.121969              11           1           0.07  
 11/1/95      3,250         3,465.79            250       250           -30    1.127593               0           2           0.06  
 12/1/95      3,500         3,761.01            250       250             0    1.142305               1           2           0.06  
12/31/95      3,500         3,815.39              0         0             0    1.158823               2           2           0.06  
  1/1/96      3,750         4,071.86            250       250             0    1.160788               2           2           0.06  
  2/1/96      4,000         4,459.54            250       250             0    1.200037               3           2           0.06  
  3/1/96      4,250         4,692.88            250       250             0    1.195553               4           2           0.06  
  4/1/96      4,500         4,924.97            250       250             0     1.19099               5           2           0.06  
  5/1/96      4,750         5,195.89            250       250             0    1.196048               6           2           0.06  
  6/1/96      5,000         5,472.42            250       250             0    1.202156               7           2           0.06  
  7/1/96      5,250         5,774.10            250       250             0    1.213508               8           2           0.06  
  8/1/96      5,500         6,083.02            250       250             0    1.225892               9           2           0.06  
  9/1/96      5,750         6,363.27            250       250             0    1.231987              10           2           0.06  
 10/1/96      6,000         6,847.37            250       250             0    1.277311              11           2           0.06  
 11/1/96      6,250         7,099.22            250       250           -30    1.283253               0           3           0.05  
 12/1/96      6,500         7,464.65            250       250             0    1.304119               1           3           0.05  
12/31/96      6,500         7,482.82              0         0             0    1.307292               2           3           0.05  
  1/1/97      6,750         7,732.82            250       250             0    1.307292               2           3           0.05  
  2/1/97      7,000         8,060.37            250       250             0    1.320403               3           3           0.05  
  3/1/97      7,250         8,397.97            250       250             0    1.334753               4           3           0.05  
  4/1/97      7,500         8,482.82            250       250             0    1.308505               5           3           0.05  
  5/1/97      7,750         8,846.86            250       250             0    1.326095               6           3           0.05  
  6/1/97      8,000         9,244.13            250       250             0     1.34817               7           3           0.05  
  7/1/97      8,250         9,613.45            250       250             0    1.365573               8           3           0.05  
  8/1/97      8,500        10,066.97            250       250             0    1.394482               9           3           0.05  
  9/1/97      8,750        10,322.66            250       250             0     1.39527              10           3           0.05  
 10/1/97      9,000        10,807.32            250       250             0    1.426988              11           3           0.05  
 11/1/97      9,250        10,897.34            250       250           -30    1.409826               0           4           0.04  
 12/1/97      9,500        11,237.96            250       250             0    1.421549               1           4           0.04  
12/31/97      9,500        11,325.33              0         0             0    1.432601               2           4           0.04  

IRR calc (monthly):           0.881%          9,500

<CAPTION> 

                                      amt subject to          amt subject to          amt subject to          amt subject to     
                                        surr charge             surr charge             surr charge             surr charge        
       Venture        FREE     SURR      12/31/94       SURR     12/31/95        SURR     12/31/96       SURR    12/31/97      SURR
             CSV    WTHDRL      CHG                      CHG                      CHG                     CHG                   CHG
 <S>   <C>          <C>        <C>    <C>              <C>    <C>               <C>   <C>               <C>   <C>             <C> 
  0                                       250.00       17.50      250.00        15.00      250.00       12.50      250.00     10.00
  1                                       217.22       15.21      250.00        15.00      250.00       12.50      250.00     10.00
  2       454.51     25.00     32.71        0.00        0.00        0.00         0.00        0.00        0.00        0.00      0.00
  2                                                               250.00        17.50      250.00       15.00      250.00     12.50
  3                                                               250.00        17.50      250.00       15.00      250.00     12.50
  4                                                               250.00        17.50      250.00       15.00      250.00     12.50
  5                                                               250.00        17.50      250.00       15.00      250.00     12.50
  6                                                               250.00        17.50      250.00       15.00      250.00     12.50
  7                                                               250.00        17.50      250.00       15.00      250.00     12.50
  8                                                               250.00        17.50      250.00       15.00      250.00     12.50
  9                                                               250.00        17.50      250.00       15.00      250.00     12.50
 10                                                               250.00        17.50      250.00       15.00      250.00     12.50
 11                                                               250.00        17.50      250.00       15.00      250.00     12.50
  0                                                               250.00        17.50      250.00       15.00      250.00     12.50
  1                                                               218.82        15.32      250.00       15.00      250.00     12.50
  2     3,572.58    346.58    237.82                                0.00         0.00        0.00        0.00        0.00      0.00
  2                                                                              0.00      250.00       17.50      250.00     15.00
  3                                                                              0.00      250.00       17.50      250.00     15.00
  4                                                                              0.00      250.00       17.50      250.00     15.00
  5                                                                              0.00      250.00       17.50      250.00     15.00
  6                                                                              0.00      250.00       17.50      250.00     15.00
  7                                                                              0.00      250.00       17.50      250.00     15.00
  8                                                                              0.00      250.00       17.50      250.00     15.00
  9                                                                              0.00      250.00       17.50      250.00     15.00
 10                                                                              0.00      250.00       17.50      250.00     15.00
 11                                                                              0.00      250.00       17.50      250.00     15.00
  0                                                                              0.00      250.00       17.50      250.00     15.00
  1                                                                              0.00      250.00       17.50      250.00     15.00
  2     7,062.82    709.92    415.00                                             0.00        0.00        0.00        0.00      0.00
  2                                                                                                                250.00     17.50
  3                                                                                                                250.00     17.50
  4                                                                                                                250.00     17.50
  5                                                                                                                250.00     17.50
  6                                                                                                                250.00     17.50
  7                                                                                                                250.00     17.50
  8                                                                                                                250.00     17.50
  9                                                                                                                250.00     17.50
 10                                                                                                                250.00     17.50
 11                                                                                                                250.00     17.50
  0                                                                                                                250.00     17.50
  1                                                                                                                250.00     17.50
  2    10,760.33   1397.34    560.00                                                                                 0.00      0.00
                                                                                                                                   
          0.629%                                       32.71                   237.82                  415.00                560.00

</TABLE> 
<PAGE>
 


                           HYPOTHETICAL PERFORMANCE
                            FOR A CONTRACT BASED ON
           AVERAGE ANNUAL TOTAL RETURNS FOR BOND OPPORTUNITIES FUND

<TABLE> 
<CAPTION> 

Period Ending:               12/31/97
1 Year                          0.83%
since inception - fund          8.25%
since inc sub acct              8.63%

<S>              <C>             <C>         <C>          <C>           <C>          <C>          <C>      <C> 
   10/31/94             1        1000           1000                    12/31/96     1.307292     1000        1000
   10/31/95      1.126635         -30        1096.64                    12/31/97     1.432601      -30     1065.85
   10/31/96      1.281185         -30        1217.07                                                        106.59
   10/31/97      1.409826         -30        1309.27                                                         57.56
   12/31/97      1.432601          -5        1325.42                                                       1008.29
                                
                                              325.42                                                         0.83%
                                                  40
                                             1285.42
                                
                                               8.25%
                                
                                
    4/19/95      1.031165        1000           1000
    4/19/96      1.194451         -30        1128.35
    4/19/97      1.311045         -30        1208.49
   12/31/97      1.432601         -20        1300.54      1320.54
# LEAP YEARS                        1

                          free                300.54
                          surr chg                50
                          surr value         1250.54

                          return               8.63%
</TABLE> 


                                    Page 1
<PAGE>
 
<TABLE> 
<CAPTION> 

CALCULATION                       $10,000 Single Payment                              0 :Prem Tax

Contract Values

                    Bond           Money                                           BI          MM Surr chrg calc
                  Income          Market         Paymts           Fee            UV's           UV's
    <S>        <C>             <C>             <C>                <C>        <C>            <C>              <C>       <C>  
      9/1/83   10,000.00       10,000.00        $10,000             0        0.993472       1.001265
    12/31/83   10,337.66       10,256.91              0             0        1.027018       1.026988         1         0.07
      9/1/84   10,620.26       10,837.36              0           -30        1.058074       1.088111         1         0.07
    12/31/84   11,445.99       11,167.88              0             0        1.140339       1.121296         2         0.06
      9/1/85   12,580.41       11,645.33              0           -30        1.256348       1.172246         2         0.06
    12/31/85   13,372.35       11,891.94              0             0        1.335435        1.19707         3         0.05
      9/1/86   14,809.45       12,313.14              0           -30        1.481948       1.242489         3         0.05
    12/31/86   15,111.95       12,494.01              0             0        1.512218        1.26074         4         0.04
      9/1/87   14,965.89       12,858.76              0           -30        1.500604       1.300574         4         0.04
    12/31/87   15,209.13       13,093.95              0             0        1.524994       1.324361         5         0.03
      9/1/88   15,900.19       13,554.73              0           -30        1.597293          1.374         5         0.03
    12/31/88   16,221.84       13,851.97              0             0        1.629605       1.404131         6         0.02
      9/1/89   17,467.89       14,552.22              0           -30        1.757794       1.478154         6         0.02
    12/31/89   17,933.29       14,893.44              0             0        1.804627       1.512813         7         0.01
      9/1/90   18,181.39       15,526.83              0           -30        1.832613       1.580198         7         0.01
    12/31/90   19,081.33       15,858.01              0             0        1.923323       1.613903         8            0
      9/1/91   20,523.32       16,360.99              0           -30        2.071694       1.668145         8            0
    12/31/91   22,162.98       16,578.79              0             0        2.237207       1.690352         9            0
      9/1/92   23,551.60       16,840.48              0           -30        2.380407       1.720092         9            0
    12/31/92   23,611.59       16,938.42              0             0         2.38647       1.730096        10            0
      9/1/93   26,174.21       17,083.06              0           -30        2.648511       1.747934        10            0
    12/31/93   26,189.62       17,169.21              0             0        2.650071       1.756748        11            0
      9/1/94   25,289.76       17,377.25              0           -30        2.562052       1.781105        11            0
    12/31/94   24,928.24       17,573.11              0             0        2.525427        1.80118        12            0
      9/1/95   28,338.69       18,046.51              0           -30        2.873971       1.852776        12            0
    12/31/95   29,762.30       18,286.72              0             0        3.018347       1.877438        13            0
      9/1/96   29,076.72       18,699.21              0           -30        2.951861       1.922867        13            0
    12/31/96   30,666.45       18,925.01              0             0         3.11325       1.946086        14            0
      9/1/97   32,206.43       19,377.41              0           -30        3.272634       1.995692        14            0
    12/31/97   33,501.83       19,627.82              0             0        3.404265       2.021482        15            0

<CAPTION> 
                                                                $10,000 Single Payment

                Surrender Values         No Premium Tax                free withdrawal amounts
                                             Money                                      Money
                              Bond          Market                         Bond        Market
                            Income                                       Income
<S>      <C>             <C>             <C>               <C>         <C>           <C>  
                                                             9/1/83
 4       12/31/83         9,674.03        9,598.92         12/31/83         1000          1000
 0         9/1/84                                            9/1/84
 4       12/31/84        10,835.99       10,557.88         12/31/84     1445.988      1167.879
 0         9/1/85                                            9/1/85
 4       12/31/85        12,862.35       11,381.94         12/31/85     3372.347      1891.937
 0         9/1/86                                            9/1/86
 4       12/31/86        14,701.95       12,084.01         12/31/86     5111.947      2494.007
 0         9/1/87                                            9/1/87
 4       12/31/87        14,899.13       12,783.95         12/31/87     5209.133      3093.946
 0         9/1/88                                            9/1/88
 4       12/31/88        16,011.84       13,641.97         12/31/88     6221.837      3851.973
 0         9/1/89                                            9/1/89
 4       12/31/89        17,823.29       14,783.44         12/31/89     7933.287      4893.435
 0         9/1/90                                            9/1/90
 4       12/31/90        19,071.33       15,848.01         12/31/90     9081.331      5858.012
 0         9/1/91                                            9/1/91
 4       12/31/91        22,152.98       16,568.79         12/31/91     12162.98      6568.791
 0         9/1/92                                            9/1/92
 4       12/31/92        23,601.59       16,928.42         12/31/92     13611.59      6938.422
 0         9/1/93                                            9/1/93
 4       12/31/93        26,179.62       17,159.21         12/31/93     16189.62      7169.206
 0         9/1/94                                            9/1/94
 4       12/31/94        24,918.24       17,563.11         12/31/94     14928.24      7573.114
 0         9/1/95                                            9/1/95
 4       12/31/95        29,752.30       18,276.72         12/31/95      19762.3      8286.722
 0         9/1/96
 4       12/31/96        30,656.45       18,915.01         12/31/96     20666.45      8925.009
 0         9/1/97
 4       12/31/97        33,491.83       19,617.82         12/31/97     23501.83      9627.821

<CAPTION> 

PERCENT CHANGE                                 PERCENT CHANGE

    ending           Bond        Money               ending          Bond           Money
      date         Income       Market                 date        Income          Market
    <S>            <C>          <C>                <C>             <C>             <C> 
    12/31/83        3.38%        2.57%             12/31/83        -3.26%          -4.01%
      9/1/84        2.73%        5.66%               9/1/84
    12/31/84        7.77%        3.05%             12/31/84        12.01%           9.99%
      9/1/85        9.91%        4.28%               9/1/85
    12/31/85        6.29%        2.12%             12/31/85        18.70%           7.81%
      9/1/86       10.75%        3.54%               9/1/86
    12/31/86        2.04%        1.47%             12/31/86        14.30%           6.17%
      9/1/87       -0.97%        2.92%               9/1/87
    12/31/87        1.63%        1.83%             12/31/87         1.34%           5.79%
      9/1/88        4.54%        3.52%               9/1/88
    12/31/88        2.02%        2.19%             12/31/88         7.47%           6.71%
</TABLE> 

<PAGE>
 
<TABLE> 
<CAPTION> 
     ending          Bond        Money                    ending          Bond           Money
       date        Income       Market                      date        Income          Market
<S>                <C>          <C>                     <C>             <C>             <C> 
     9/1/89         7.68%        5.06%                  12/31/89        11.31%           8.37%
   12/31/89         2.66%        2.34%                    9/1/90                             
     9/1/90         1.38%        4.25%                  12/31/90         7.00%           7.20%
   12/31/90         4.95%        2.13%                    9/1/91                             
     9/1/91         7.56%        3.17%                  12/31/91        16.16%           4.55%
   12/31/91         7.99%        1.33%                    9/1/92                             
     9/1/92         6.27%        1.58%                  12/31/92         6.54%           2.17%
   12/31/92         0.25%        0.58%                    9/1/93                             
     9/1/93        10.85%        0.85%                  12/31/93        10.92%           1.36%
   12/31/93         0.06%        0.50%                    9/1/94                             
     9/1/94        -3.44%        1.21%                  12/31/94        -4.82%           2.35%
   12/31/94        -1.43%        1.13%                    9/1/95                             
     9/1/95        13.68%        2.69%                  12/31/95        19.40%           4.06%
   12/31/95         5.02%        1.33%                    9/1/96                             
     9/1/96        -2.30%        2.26%                  12/31/96         3.04%           3.49%
   12/31/96         5.47%        1.21%                    9/1/97                             
     9/1/97         5.02%        2.39%                  12/31/97         9.25%           3.72%
   12/31/97         4.02%        1.29%            
</TABLE> 
<PAGE>
 
<TABLE> 
<CAPTION> 
Annual Eff Rate:                   8.27%           4.09%                   8.13%        3.90%

CALCULATION                         $250 Payment per month              Prem tax:           0

                                          No Premium Tax
            Cumulative              Bond           Money                     Net
              Payments            Income          Market      Paymts      Paymts          Fee                UV's           UV's
 <S>        <C>                <C>             <C>            <C>         <C>             <C>            <C>            <C> 
   9/1/83          250            250.00          250.00         250         250            0            0.993472       1.001265
  10/1/83          500            506.33          501.54         250         250            0            1.018628       1.007432
  11/1/83          750            755.66          754.92         250         250            0            1.017278       1.014216
  12/1/83        1,000          1,013.45        1,009.64         250         250            0            1.027763       1.020555
 12/31/83        1,000          1,012.71        1,016.00           0           0            0            1.027018       1.026988
   1/1/84        1,250          1,262.71        1,266.00         250         250            0            1.027018       1.026988
   2/1/84        1,500          1,533.48        1,525.02         250         250            0            1.043912       1.034307
   3/1/84        1,750          1,773.30        1,784.50         250         250            0            1.036979       1.040737
   4/1/84        2,000          2,013.93        2,045.82         250         250            0            1.031501        1.04734
   5/1/84        2,250          2,261.46        2,310.67         250         250            0            1.030235       1.054939
   6/1/84        2,500          2,474.95        2,577.84         250         250            0            1.013603        1.06278
   7/1/84        2,750          2,737.83        2,845.89         250         250            0            1.018876        1.07022
   8/1/84        3,000          3,066.42        3,120.17         250         250            0            1.048123        1.07935
   9/1/84        3,250          3,315.53        3,365.49         250         250          -30            1.058074       1.088111
  10/1/84        3,500          3,617.33        3,643.65         250         250            0            1.074604       1.097213
  11/1/84        3,750          3,995.70        3,923.00         250         250            0            1.112741       1.106053
  12/1/84        4,000          4,299.50        4,200.07         250         250            0            1.127722       1.113685
 12/31/84        4,000          4,347.60        4,228.77           0           0            0            1.140339       1.121296
   1/1/85        4,250          4,597.60        4,478.77         250         250            0            1.140339       1.121296
   2/1/85        4,500          4,904.14        4,757.62         250         250            0            1.154362       1.128518
   3/1/85        4,750          5,108.49        5,032.68         250         250            0            1.143618       1.134461
   4/1/85        5,000          5,428.66        5,312.20         250         250            0            1.159325       1.141116
   5/1/85        5,250          5,797.69        5,592.67         250         250            0            1.184746       1.147661
   6/1/85        5,500          6,292.11        5,873.41         250         250            0            1.234692        1.15397
   7/1/85        5,750          6,610.97        6,155.89         250         250            0            1.248205       1.160352
   8/1/85        6,000          6,816.78        6,438.63         250         250            0             1.23986       1.166522
   9/1/85        6,250          7,127.43        6,690.22         250         250          -30            1.256348       1.172246
  10/1/85        6,500          7,399.25        6,976.70         250         250            0            1.260194       1.178637
  11/1/85        6,750          7,737.21        7,263.71         250         250            0            1.275175       1.184891
  12/1/85        7,000          8,131.78        7,548.35         250         250            0            1.299002       1.190541
 12/31/85        7,000          8,359.85        7,589.75           0           0            0            1.335435        1.19707
   1/1/86        7,250          8,609.85        7,839.75         250         250            0            1.335435        1.19707
   2/1/86        7,500          8,876.70        8,131.16         250         250            0            1.338048       1.203393
   3/1/86        7,750          9,423.92        8,419.81         250         250            0            1.382851       1.209113
   4/1/86        8,000          9,937.97        8,714.38         250         250            0            1.421597       1.215514
   5/1/86        8,250         10,251.50        9,005.50         250         250            0            1.430685        1.22125
   6/1/86        8,500         10,394.63        9,294.88         250         250            0             1.41577        1.22659
   7/1/86        8,750         10,809.05        9,588.58         250         250            0            1.438165       1.232357

<CAPTION> 

                     Surrender Values                      surrender charge

                  Bond              Money               Bond              Money
                Income             Market              Income            Market
 <S>           <C>                 <C>                 <C>               <C> 
  0
  1
  2
  3
  4              933.57              936.63               69.14           69.37
  4
  5
  6
  7
  8
  9
 10
 11
  0
  1
  2
  3
  4            4,067.60            3,956.32              270.00          262.46
  4
  5
  6
  7
  8
  9
 10
 11
  0
  1
  2
  3
  4            7,909.85            7,145.30              440.00          434.45
  4
  5
  6
  7
  8
  9
 10
</TABLE> 

<PAGE>
 
<TABLE> 
<CAPTION> 
Annual Eff Rate:                   8.27%           4.09%                   8.13%        3.90%

CALCULATION                          $250 Payment per month            Prem tax:            0

                                          No Premium Tax
            Cumulative              Bond           Money                     Net
              Payments            Income          Market      Paymts      Paymts          Fee                UV's           UV's
 <S>        <C>                <C>             <C>            <C>         <C>             <C>            <C>            <C> 
   8/1/86        9,000         11,104.10        9,881.10         250         250            0            1.444159       1.237822
   9/1/86        9,250         11,614.66       10,138.36         250         250          -30            1.481948       1.242489
  10/1/86        9,500         11,831.52       10,429.21         250         250            0            1.477719       1.247495
  11/1/86        9,750         12,226.51       10,715.43         250         250            0            1.495828       1.251828
  12/1/86       10,000         12,632.80       11,003.82         250         250            0            1.514949       1.256313
 12/31/86       10,000         12,610.03       11,042.60           0           0            0            1.512218        1.26074
   1/1/87       10,250         12,860.03       11,292.60         250         250            0            1.512218        1.26074
   2/1/87       10,500         13,434.34       11,582.36         250         250            0            1.550354       1.265179
   3/1/87       10,750         13,761.08       11,870.12         250         250            0             1.55921       1.269304
   4/1/87       11,000         13,937.51       12,166.70         250         250            0            1.550874       1.274285
   5/1/87       11,250         13,707.83       12,461.42         250         250            0            1.497499       1.278969
   6/1/87       11,500         13,915.87       12,761.52         250         250            0            1.492915       1.284111
   7/1/87       11,750         14,296.96       13,064.03         250         250            0            1.506978       1.289394
   8/1/87       12,000         14,536.11       13,368.95         250         250            0            1.505835       1.294815
   9/1/87       12,250         14,705.62       13,648.41         250         250          -30            1.500604       1.300574
  10/1/87       12,500         14,619.00       13,956.08         250         250            0            1.466254       1.306069
  11/1/87       12,750         15,097.16       14,267.59         250         250            0            1.489138       1.311826
  12/1/87       13,000         15,559.02       14,586.97         250         250            0            1.510036       1.318205
 12/31/87       13,000         15,713.15       14,655.09           0           0            0            1.524994       1.324361
   1/1/88       13,250         15,963.15       14,905.09         250         250            0            1.524994       1.324361
   2/1/88       13,500         16,717.98       15,228.88         250         250            0            1.573222       1.330917
   3/1/88       13,750         17,164.48       15,543.45         250         250            0            1.591713        1.33656
   4/1/88       14,000         17,271.14       15,859.90         250         250            0            1.578421       1.342274
   5/1/88       14,250         17,472.35       16,174.94         250         250            0            1.573962       1.347779
   6/1/88       14,500         17,740.80       16,502.44         250         250            0            1.575624       1.354236
   7/1/88       14,750         18,231.16       16,826.50         250         250            0            1.596971       1.360314
   8/1/88       15,000         18,443.22       17,158.44         250         250            0            1.593648       1.366938
   9/1/88       15,250         18,705.41       17,467.08         250         250          -30            1.597293          1.374
  10/1/88       15,500         19,275.23       17,805.12         250         250            0            1.624603       1.380925
  11/1/88       15,750         19,780.68       18,154.77         250         250            0            1.646134       1.388654
  12/1/88       16,000         19,880.97       18,502.17         250         250            0            1.633675       1.396104
 12/31/88       16,000         19,831.44       18,608.55           0           0            0            1.629605       1.404131
   1/1/89       16,250         20,081.44       18,858.55         250         250            0            1.629605       1.404131
   2/1/89       16,500         20,513.63       19,225.85         250         250            0             1.64439       1.412865
   3/1/89       16,750         20,726.32       19,585.29         250         250            0            1.641399       1.420907
   4/1/89       17,000         21,047.55       19,962.36         250         250            0             1.64704       1.430126
   5/1/89       17,250         21,601.08       20,351.40         250         250            0            1.670792       1.440087
   6/1/89       17,500         22,324.51       20,742.65         250         250            0            1.707411       1.450082
   7/1/89       17,750         23,028.79       21,122.83         250         250            0            1.742155       1.459183
   8/1/89       18,000         23,704.36       21,515.04         250         250            0             1.77435       1.469007
   9/1/89       18,250         23,703.18       21,869.01         250         250          -30            1.757794       1.478154

<CAPTION> 
                    Surrender Values                      surrender charge

                  Bond              Money               Bond             Money
                Income             Market             Income            Market
 <S>          <C>                 <C>                 <C>               <C> 
 11
  0
  1
  2
  3
  4           12,020.03           10,452.60              580.00          580.00
  4
  5
  6
  7
  8
  9
 10
 11
  0
  1
  2
  3
  4           15,013.15           13,955.09              690.00          690.00
  4
  5
  6
  7
  8
  9
 10
 11
  0
  1
  2
  3
  4           19,051.44           17,828.55              770.00          770.00
  4
  5
  6
  7
  8
  9
 10
 11
  0
</TABLE> 

<PAGE>
 
<TABLE> 
<CAPTION> 
Annual Eff Rate:                   8.27%           4.09%                   8.13%        3.90%

CALCULATION                        $250 Payment per month              Prem tax:            0

                                          No Premium Tax
            Cumulative              Bond           Money                     Net
              Payments            Income          Market      Paymts      Paymts          Fee                UV's           UV's
 <S>        <C>                <C>             <C>            <C>         <C>             <C>            <C>            <C> 
  10/1/89       18,500         23,960.56       22,244.22         250         250            0            1.758341       1.486617
  11/1/89       18,750         24,715.05       22,631.34         250         250            0            1.795363       1.495781
  12/1/89       19,000         25,075.13       23,009.75         250         250            0            1.803359       1.504268
 12/31/89       19,000         25,092.76       23,140.46           0           0            0            1.804627       1.512813
   1/1/90       19,250         25,342.76       23,390.46         250         250            0            1.804627       1.512813
   2/1/90       19,500         25,278.58       23,775.62         250         250            0            1.782255       1.521555
   3/1/90       19,750         25,493.55       24,145.25         250         250            0            1.779785       1.529211
   4/1/90       20,000         25,818.53       24,526.12         250         250            0             1.78502       1.537499
   5/1/90       20,250         25,734.92       24,913.30         250         250            0            1.761955       1.546099
   6/1/90       20,500         26,889.54       25,304.04         250         250            0             1.82389       1.554833
   7/1/90       20,750         27,328.07       25,686.79         250         250            0            1.836678        1.56299
   8/1/90       21,000         28,044.75       26,083.32         250         250            0            1.868043       1.571906
   9/1/90       21,250         27,732.85       26,440.91         250         250          -30            1.832613       1.580198
  10/1/90       21,500         28,305.63       26,833.19         250         250            0            1.853943       1.588701
  11/1/90       21,750         28,832.88       27,228.65         250         250            0            1.872102       1.597313
  12/1/90       22,000         29,567.27       27,615.31         250         250            0            1.903553        1.60533
 12/31/90       22,000         29,874.35       27,762.78           0           0            0            1.923323       1.613903
   1/1/91       22,250         30,124.35       28,012.78         250         250            0            1.923323       1.613903
   2/1/91       22,500         30,836.76       28,412.84         250         250            0            1.952846       1.622548
   3/1/91       22,750         31,025.74       28,785.98         250         250            0            1.948982        1.62958
   4/1/91       23,000         31,623.35       29,166.43         250         250            0            1.970818       1.636965
   5/1/91       23,250         32,252.41       29,535.34         250         250            0            1.994442       1.643639
   6/1/91       23,500         32,623.75       29,898.96         250         250            0            2.001945       1.649962
   7/1/91       23,750         32,783.94       30,262.24         250         250            0            1.996434       1.656213
   8/1/91       24,000         33,386.55       30,625.74         250         250            0            2.017907       1.662425
   9/1/91       24,250         34,496.47       30,951.12         250         250          -30            2.071694       1.668145
  10/1/91       24,500         35,515.89       31,314.15         250         250            0            2.117902       1.674237
  11/1/91       24,750         35,991.49       31,671.53         250         250            0            2.131355       1.679978
  12/1/91       25,000         36,580.67       32,015.56         250         250            0            2.151441       1.684966
 12/31/91       25,000         38,038.94       32,117.90           0           0            0            2.237207       1.690352
   1/1/92       25,250         38,288.94       32,367.90         250         250            0            2.237207       1.690352
   2/1/92       25,500         37,957.34       32,709.87         250         250            0            2.203224       1.695155
   3/1/92       25,750         38,389.64       33,037.85         250         250            0            2.213806       1.699196
   4/1/92       26,000         38,501.37       33,366.46         250         250            0            2.205832       1.703239
   5/1/92       26,250         38,740.89       33,687.80         250         250            0            2.205232       1.706881
   6/1/92       26,500         39,583.22       34,007.75         250         250            0            2.238949       1.710425
   7/1/92       26,750         40,695.22       34,323.62         250         250            0            2.287706       1.713738
   8/1/92       27,000         42,127.26       34,638.43         250         250            0            2.354155       1.716974
   9/1/92       27,250         42,817.03       34,921.34         250         250          -30            2.380407       1.720092
  10/1/92       27,500         43,822.41       35,224.41         250         250            0            2.422402       1.722706
  11/1/92       27,750         42,929.20       35,526.14         250         250            0            2.359208       1.725236

<CAPTION> 
                     Surrender Values                     surrender charge

                Bond               Money               Bond              Money
               Income             Market              Income            Market
 <S>         <C>                <C>                   <C>          <C> 
  1
  2
  3
  4           24,262.76           22,310.46              820.00          820.00
  4
  5
  6
  7
  8
  9
 10
 11
  0
  1
  2
  3
  4           29,024.35           26,912.78              840.00          840.00
  4
  5
  6
  7
  8
  9
 10
 11
  0
  1
  2
  3
  4           37,188.94           31,267.90              840.00          840.00
  4
  5
  6
  7
  8
  9
 10
 11
  0
  1
  2
</TABLE> 

<PAGE>
 
<TABLE> 
<CAPTION> 
Annual Eff Rate:                   8.27%           4.09%                   8.13%        3.90%

CALCULATION                        $250 Payment per month             Prem tax:             0

                                          No Premium Tax
            Cumulative              Bond           Money                     Net
              Payments            Income          Market      Paymts      Paymts          Fee                UV's           UV's
 <S>        <C>                <C>             <C>            <C>         <C>             <C>            <C>            <C> 
  12/1/92       28,000         42,940.01       35,826.20         250         250            0            2.346063       1.727667
 12/31/92       28,000         43,679.58       35,876.57           0           0            0             2.38647       1.730096
   1/1/93       28,250         43,929.58       36,126.57         250         250            0             2.38647       1.730096
   2/1/93       28,500         45,253.72       36,432.03         250         250            0            2.444823       1.732752
   3/1/93       28,750         46,750.10       36,728.09         250         250            0            2.512158       1.734943
   4/1/93       29,000         46,850.44       37,024.92         250         250            0            2.504116       1.737155
   5/1/93       29,250         47,477.94       37,318.72         250         250            0            2.524293        1.73921
   6/1/93       29,500         47,932.84       37,616.16         250         250            0            2.535187       1.741421
   7/1/93       29,750         48,985.21       37,911.26         250         250            0            2.577625       1.743509
   8/1/93       30,000         49,546.00       38,209.34         250         250            0            2.593979        1.74572
   9/1/93       30,250         50,807.59       38,477.80         250         250          -30            2.648511       1.747934
  10/1/93       30,500         51,209.35       38,774.07         250         250            0            2.656422       1.750036
  11/1/93       30,750         51,398.47       39,073.43         250         250            0            2.653264       1.752264
  12/1/93       31,000         51,359.98       39,372.51         250         250            0            2.638372       1.754465
 12/31/93       31,000         51,587.72       39,423.75           0           0            0            2.650071       1.756748
   1/1/94       31,250         51,837.72       39,673.75         250         250            0            2.650071       1.756748
   2/1/94       31,500         52,672.93       39,977.93         250         250            0            2.679988       1.759147
   3/1/94       31,750         51,642.36       40,275.63         250         250            0            2.614833       1.761246
   4/1/94       32,000         50,815.72       40,580.88         250         250            0            2.560319       1.763662
   5/1/94       32,250         50,579.91       40,893.02         250         250            0            2.535842       1.766363
   6/1/94       32,500         50,622.30       41,216.74         250         250            0            2.525433       1.769547
   7/1/94       32,750         50,560.62       41,545.60         250         250            0            2.509884       1.772933
   8/1/94       33,000         51,613.60       41,887.60         250         250            0            2.549745       1.776859
   9/1/94       33,250         52,082.73       42,207.70         250         250          -30            2.562052       1.781105
  10/1/94       33,500         51,717.28       42,558.03         250         250            0            2.531777       1.785339
  11/1/94       33,750         51,581.21       42,929.06         250         250            0            2.512877       1.790416
  12/1/94       34,000         51,842.70       43,299.40         250         250            0            2.513437       1.795435
 12/31/94       34,000         52,090.01       43,437.95           0           0            0            2.525427        1.80118
   1/1/95       34,250         52,340.01       43,687.95         250         250            0            2.525427        1.80118
   2/1/95       34,500         53,295.37       44,093.64         250         250            0            2.559461       1.807599
   3/1/95       34,750         55,300.57       44,489.12         250         250            0            2.643753       1.813563
   4/1/95       35,000         55,547.60       44,898.36         250         250            0            2.643611       1.820054
   5/1/95       35,250         56,798.74       45,314.25         250         250            0            2.691257       1.826779
   6/1/95       35,500         59,782.46       45,729.88         250         250            0            2.820787       1.833456
   7/1/95       35,750         60,349.92       46,134.72         250         250            0            2.835766       1.839664
   8/1/95       36,000         60,040.42       46,554.12         250         250            0            2.809476       1.846419
   9/1/95       36,250         61,638.73       46,934.40         250         250          -30            2.873971       1.852776
  10/1/95       36,500         62,417.36       47,336.01         250         250            0            2.898619       1.858761
  11/1/95       36,750         63,550.51       47,749.66         250         250            0            2.939632       1.865187
  12/1/95       37,000         64,703.56       48,155.00         250         250            0            2.981404       1.871255
 12/31/95       37,000         65,505.31       48,314.12           0           0            0            3.018347       1.877438

<CAPTION> 
                       Surrender Values                     surrender charge

                    Bond              Money                Bond            Money
                  Income             Market              Income           Market
  <S>          <C>                 <C>                   <C>              <C> 
   3
   4           42,829.58           35,026.57              840.00          840.00
   4
   5
   6
   7
   8
   9
  10
  11
   0
   1
   2
   3
   4           50,737.72           38,573.75              840.00          840.00
   4
   5
   6
   7
   8
   9
  10
  11
   0
   1
   2
   3
   4           51,240.01           42,587.95              840.00          840.00
   4
   5
   6
   7
   8
   9
  10
  11
   0
   1
   2
   3
   4           64,655.31           47,464.12              840.00          840.00
</TABLE> 

<PAGE>
 
<TABLE> 
<CAPTION> 
Annual Eff Rate:                   8.27%           4.09%                   8.13%        3.90%

CALCULATION                         $250 Payment per month           Prem tax:              0

                                          No Premium Tax
            Cumulative              Bond           Money                     Net
              Payments            Income          Market      Paymts      Paymts          Fee                UV's           UV's
  <S>       <C>                <C>             <C>            <C>         <C>             <C>            <C>            <C> 
   1/1/96       37,250         65,755.31       48,564.12         250         250            0            3.018347       1.877438
   2/1/96       37,500         66,143.19       48,972.81         250         250            0            3.024676       1.883573
   3/1/96       37,750         65,392.49       49,364.30         250         250            0            2.978915       1.889015
   4/1/96       38,000         64,884.41       49,762.66         250         250            0            2.944381       1.894692
   5/1/96       38,250         64,426.15       50,156.30         250         250            0            2.912241       1.900161
   6/1/96       38,500         64,614.30       50,550.52         250         250            0            2.909445       1.905625
   7/1/96       38,750         65,730.80       50,952.12         250         250            0            2.948462        1.91134
   8/1/96       39,000         66,694.81       51,356.77         250         250            0             2.98049       1.917141
   9/1/96       39,250         66,274.18       51,730.16         250         250          -30            2.951861       1.922867
  10/1/96       39,500         68,130.77       52,135.71         250         250            0            3.023419       1.928649
  11/1/96       39,750         69,815.78       52,545.41         250         250            0              3.0871       1.934557
  12/1/96       40,000         71,572.69       52,947.68         250         250            0            3.153732       1.940163
 12/31/96       40,000         70,653.96       53,109.32           0           0            0             3.11325       1.946086
   1/1/97       40,250         70,903.96       53,359.32         250         250            0             3.11325       1.946086
   2/1/97       40,500         71,445.14       53,776.03         250         250            0            3.126035       1.952166
   3/1/97       40,750         72,041.92       54,177.37         250         250            0            3.141208        1.95766
   4/1/97       41,000         71,247.00       54,600.00         250         250            0            3.095647       1.963898
   5/1/97       41,250         72,373.88       55,018.18         250         250            0            3.133747       1.969947
   6/1/97       41,500         73,314.98       55,444.63         250         250            0            3.163671       1.976265
   7/1/97       41,750         74,899.43       55,874.91         250         250            0            3.221255       1.982691
   8/1/97       42,000         76,957.96       56,308.21         250         250            0            3.299036       1.989195
   9/1/97       42,250         76,562.07       56,712.12         250         250          -30            3.272634       1.995692
  10/1/97       42,500         78,475.27       57,143.30         250         250            0            3.343727       2.002068
  11/1/97       42,750         79,101.74       57,574.43         250         250            0            3.359768       2.008414
  12/1/97       43,000         79,635.89       58,014.92         250         250            0            3.371837       2.015059
 12/31/97       43,000         80,401.77       58,199.85           0           0            0            3.404265       2.021482

IRR calc (monthly):               0.664%          0.335%       43000

<CAPTION> 
                     Surrender Values                       surrender charge

                Bond                Money                Bond             Money
               Income              Market               Income           Market
 <S>          <C>                 <C>                   <C>              <C> 
  4
  5
  6
  7
  8
  9
 10
 11
  0
  1
  2
  3
  4           69,803.96           52,259.32              840.00          840.00
  4
  5
  6
  7
  8
  9
 10
 11
  0
  1
  2
  3
  4           79,551.77           57,349.85              840.00          840.00

IRR calc 
(monthly):       0.654%              0.319%
</TABLE> 
<PAGE>
 
<TABLE> 
<CAPTION> 
                      free withdrawal amt
                                  amt subject to                                       amt subject to
                 Bond      Money    surr charge                  surrender charge     surrender charge        surrender charge
               Income     Market     12/31/83                                             12/31/84
<S>            <C>        <C>     <C>                <C>         <C>            <C>   <C>             <C>     <C>           <C> 
   9/1/83                               250.00       250.00        17.50        17.50    250.00       250.00      15.00     15.00
  10/1/83                               250.00       250.00        17.50        17.50    250.00       250.00      15.00     15.00
  11/1/83                               250.00       250.00        17.50        17.50    250.00       250.00      15.00     15.00
  12/1/83                               237.71       241.00        16.64        16.87    250.00       250.00      15.00     15.00
 12/31/83          25         25          0.00         0.00         0.00         0.00      0.00         0.00       0.00      0.00
   1/1/84                                                                                250.00       250.00      17.50     17.50
   2/1/84                                                                                250.00       250.00      17.50     17.50
   3/1/84                                                                                250.00       250.00      17.50     17.50
   4/1/84                                                                                250.00       250.00      17.50     17.50
   5/1/84                                                                                250.00       250.00      17.50     17.50
   6/1/84                                                                                250.00       250.00      17.50     17.50
   7/1/84                                                                                250.00       250.00      17.50     17.50
   8/1/84                                                                                250.00       250.00      17.50     17.50
   9/1/84                                                                                250.00       250.00      17.50     17.50
  10/1/84                                                                                250.00       250.00      17.50     17.50
  11/1/84                                                                                250.00       250.00      17.50     17.50
  12/1/84                                                                                250.00       142.23      17.50      9.96
 12/31/84   347.6014    336.5493                                                           0.00         0.00       0.00      0.00
   1/1/85
   2/1/85
   3/1/85
   4/1/85
   5/1/85
   6/1/85
   7/1/85
   8/1/85
   9/1/85
  10/1/85
  11/1/85
  12/1/85
 12/31/85    1359.85    669.0221  
   1/1/86
   2/1/86
   3/1/86
   4/1/86
   5/1/86
   6/1/86
   7/1/86
   8/1/86
   9/1/86
  10/1/86
  11/1/86
  12/1/86
 12/31/86   2610.028    1042.596
   1/1/87
   2/1/87
   3/1/87
   4/1/87
   5/1/87
   6/1/87
   7/1/87
   8/1/87
   9/1/87
  10/1/87

<CAPTION> 

amt subject to                                 amt subject to                                 amt subject to
surrender charge       surrender charge      surrender charge          surrender charge      surrender charge       surrender charge
    12/31/85                                      12/31/86                                       12/31/87
<S>            <C>     <C>             <C>   <C>             <C>       <C>            <C>    <C>             <C>    <C>  
  250.00       250.00     12.50        12.50    250.00       250.00      10.00        10.00     250.00       250.00         7.50
  250.00       250.00     12.50        12.50    250.00       250.00      10.00        10.00     250.00       250.00         7.50
  250.00       250.00     12.50        12.50    250.00       250.00      10.00        10.00     250.00       250.00         7.50
  250.00       250.00     12.50        12.50    250.00       250.00      10.00        10.00     250.00       250.00         7.50
    0.00         0.00      0.00         0.00      0.00         0.00       0.00         0.00       0.00         0.00         0.00
  250.00       250.00     15.00        15.00    250.00       250.00      12.50        12.50     250.00       250.00        10.00
  250.00       250.00     15.00        15.00    250.00       250.00      12.50        12.50     250.00       250.00        10.00
  250.00       250.00     15.00        15.00    250.00       250.00      12.50        12.50     250.00       250.00        10.00
  250.00       250.00     15.00        15.00    250.00       250.00      12.50        12.50     250.00       250.00        10.00
  250.00       250.00     15.00        15.00    250.00       250.00      12.50        12.50     250.00       250.00        10.00
  250.00       250.00     15.00        15.00    250.00       250.00      12.50        12.50     250.00       250.00        10.00
  250.00       250.00     15.00        15.00    250.00       250.00      12.50        12.50     250.00       250.00        10.00
  250.00       250.00     15.00        15.00    250.00       250.00      12.50        12.50     250.00       250.00        10.00
  250.00       250.00     15.00        15.00    250.00       250.00      12.50        12.50     250.00       250.00        10.00
  250.00       250.00     15.00        15.00    250.00       250.00      12.50        12.50     250.00       250.00        10.00
  250.00       250.00     15.00        15.00    250.00       250.00      12.50        12.50     250.00       250.00        10.00
  250.00       250.00     15.00        15.00    250.00       250.00      12.50        12.50     250.00       250.00        10.00
    0.00         0.00      0.00         0.00      0.00         0.00       0.00         0.00       0.00         0.00         0.00
  250.00       250.00     17.50        17.50    250.00       250.00      15.00        15.00     250.00       250.00        12.50
  250.00       250.00     17.50        17.50    250.00       250.00      15.00        15.00     250.00       250.00        12.50
  250.00       250.00     17.50        17.50    250.00       250.00      15.00        15.00     250.00       250.00        12.50
  250.00       250.00     17.50        17.50    250.00       250.00      15.00        15.00     250.00       250.00        12.50
  250.00       250.00     17.50        17.50    250.00       250.00      15.00        15.00     250.00       250.00        12.50
  250.00       250.00     17.50        17.50    250.00       250.00      15.00        15.00     250.00       250.00        12.50
  250.00       250.00     17.50        17.50    250.00       250.00      15.00        15.00     250.00       250.00        12.50
  250.00       250.00     17.50        17.50    250.00       250.00      15.00        15.00     250.00       250.00        12.50
  250.00       250.00     17.50        17.50    250.00       250.00      15.00        15.00     250.00       250.00        12.50
  250.00       250.00     17.50        17.50    250.00       250.00      15.00        15.00     250.00       250.00        12.50
  250.00       250.00     17.50        17.50    250.00       250.00      15.00        15.00     250.00       250.00        12.50
  250.00       170.72     17.50        11.95    250.00       250.00      15.00        15.00     250.00       250.00        12.50
    0.00         0.00      0.00         0.00      0.00         0.00       0.00         0.00       0.00         0.00         0.00
                                                250.00       250.00      17.50        17.50     250.00       250.00        15.00
                                                250.00       250.00      17.50        17.50     250.00       250.00        15.00
                                                250.00       250.00      17.50        17.50     250.00       250.00        15.00
                                                250.00       250.00      17.50        17.50     250.00       250.00        15.00
                                                250.00       250.00      17.50        17.50     250.00       250.00        15.00
                                                250.00       250.00      17.50        17.50     250.00       250.00        15.00
                                                250.00       250.00      17.50        17.50     250.00       250.00        15.00
                                                250.00       250.00      17.50        17.50     250.00       250.00        15.00
                                                250.00       250.00      17.50        17.50     250.00       250.00        15.00
                                                250.00       250.00      17.50        17.50     250.00       250.00        15.00
                                                250.00       250.00      17.50        17.50     250.00       250.00        15.00
                                                250.00       250.00      17.50        17.50     250.00       250.00        15.00
                                                  0.00         0.00       0.00         0.00       0.00         0.00         0.00
                                                                                                250.00       250.00        17.50
                                                                                                250.00       250.00        17.50
                                                                                                250.00       250.00        17.50
                                                                                                250.00       250.00        17.50
                                                                                                250.00       250.00        17.50
                                                                                                250.00       250.00        17.50
                                                                                                250.00       250.00        17.50
                                                                                                250.00       250.00        17.50
                                                                                                250.00       250.00        17.50
                                                                                                250.00       250.00        17.50
</TABLE> 

<TABLE> 
<CAPTION> 

  amt subject to                              amt subject to                             amt subject to
 surrender charge      surrender charge      surrender charge      surrender charge     surrender charge          surrender charge
     12/31/85                                    12/31/86                                   12/31/87
 <S>         <C>       <C>          <C>      <C>          <C>      <C>         <C>      <C>              <C>      <C>    
                                                                                            250.00       250.00        17.50
                                                                                            250.00       250.00        17.50
                                                                                              0.00         0.00         0.00

</TABLE> 

<PAGE>
 
<TABLE> 
<CAPTION> 

                   free withdrawal amt
                                       amt subject to                                   amt subject to
                 Bond        Money       surr charge          surrender charge          surrender charge          surrender charge
               Income       Market        12/31/83                                          12/31/84
<S>           <C>          <C>         <C>          <C>       <C>           <C>         <C>            <C>        <C>          <C> 
  11/1/87
  12/1/87
 12/31/87     2713.147     1655.094 
   1/1/88
   2/1/88
   3/1/88
   4/1/88
   5/1/88
   6/1/88
   7/1/88
   8/1/88
   9/1/88
  10/1/88
  11/1/88
  12/1/88
 12/31/88     3831.439     2608.551
   1/1/89
   2/1/89
   3/1/89
   4/1/89
   5/1/89
   6/1/89
   7/1/89
   8/1/89
   9/1/89
  10/1/89
  11/1/89
  12/1/89
 12/31/89     6092.756     4140.457 
   1/1/90
   2/1/90
   3/1/90
   4/1/90
   5/1/90
   6/1/90
   7/1/90
   8/1/90
   9/1/90
  10/1/90
  11/1/90
  12/1/90
 12/31/90     7874.348     5762.784 
   1/1/91
   2/1/91
   3/1/91
   4/1/91
   5/1/91
   6/1/91
   7/1/91
   8/1/91
   9/1/91
  10/1/91
  11/1/91
  12/1/91
 12/31/91     13038.94     7117.901 
   1/1/92
   2/1/92


</TABLE> 



<PAGE>
 
<TABLE> 
<CAPTION> 
                   free withdrawal amt
                                         amt subject to                                       amt subject to
               Bond        Money          surr charge           surrender charge             surrender charge       surrender charge
             Income       Market           12/31/83                                              12/31/84
 <S>         <C>           <C>           <C>          <C>       <C>          <C>             <C>          <C>       <C>    
   3/1/92
   4/1/92
   5/1/92
   6/1/92
   7/1/92
   8/1/92
   9/1/92
  10/1/92
  11/1/92
  12/1/92
 12/31/92    15679.58      7876.565 
   1/1/93
   2/1/93
   3/1/93
   4/1/93
   5/1/93
   6/1/93
   7/1/93
   8/1/93
   9/1/93
  10/1/93
  11/1/93
  12/1/93
 12/31/93    20587.72      8423.748 
   1/1/94
   2/1/94
   3/1/94
   4/1/94
   5/1/94
   6/1/94
   7/1/94
   8/1/94
   9/1/94
  10/1/94
  11/1/94
  12/1/94
 12/31/94    18090.01      9437.947  
   1/1/95
   2/1/95
   3/1/95
   4/1/95
   5/1/95
   6/1/95
   7/1/95
   8/1/95
   9/1/95
  10/1/95
  11/1/95
  12/1/95
 12/31/95     28505.31     11314.12  
   1/1/96
   2/1/96
   3/1/96
   4/1/96
   5/1/96
   6/1/96
   7/1/96
</TABLE> 


<PAGE>
 
<TABLE> 
<CAPTION> 
                   free withdrawal amt
                                      amt subject to                                       amt subject to
                 Bond        Money     surr charge             surrender charge          surrender charge          surrender charge
               Income       Market      12/31/83                                            12/31/84
 <S>        <C>          <C>          <C>                      <C>                       <C>                       <C>  
   8/1/96
   9/1/96
  10/1/96
  11/1/96
  12/1/96
 12/31/96   30653.96     13109.32 
   1/1/97
   2/1/97
   3/1/97
   4/1/97
   5/1/97
   6/1/97
   7/1/97
   8/1/97
   9/1/97
  10/1/97
  11/1/97
  12/1/97
 12/31/97   37401.77     15199.84 
                                                                   69.14        69.37                          270.00       262.46
<CAPTION> 

amt subject to                             amt subject to                                amt subject to
surrender charge     surrender charge      surrender charge    surrender charge          surrender charge     surrender charge
   12/31/85                                   12/31/86                                       12/31/87
<S>                  <C>          <C>      <C>                 <C>          <C>          <C>                  <C> 



                     440.00       434.45                       580.00       580.00                            690.00
</TABLE> 
<PAGE>
 
<TABLE> 
<CAPTION> 

              amt subject to                                   amt subject to                                   amt subject to
surrender     surrender charge        surrender charge         surrender charge          surrender charge       surrender charge
 charge          12/31/88                                         12/31/89                                         12/31/90
 <S>          <C>              <C>    <C>                <C>       <C>          <C>         <C>      <C>      <C>            <C>   
   7.50           250.00       250.00       5.00         5.00      250.00       250.00      2.50     2.50
   7.50           250.00       250.00       5.00         5.00      250.00       250.00      2.50     2.50
   7.50           250.00       250.00       5.00         5.00      250.00       250.00      2.50     2.50
   7.50           250.00       250.00       5.00         5.00      250.00       250.00      2.50     2.50
   0.00             0.00         0.00       0.00         0.00        0.00         0.00      0.00     0.00         0.00         0.00
  10.00           250.00       250.00       7.50         7.50      250.00       250.00      5.00     5.00       250.00       250.00
  10.00           250.00       250.00       7.50         7.50      250.00       250.00      5.00     5.00       250.00       250.00
  10.00           250.00       250.00       7.50         7.50      250.00       250.00      5.00     5.00       250.00       250.00
  10.00           250.00       250.00       7.50         7.50      250.00       250.00      5.00     5.00       250.00       250.00
  10.00           250.00       250.00       7.50         7.50      250.00       250.00      5.00     5.00       250.00       250.00
  10.00           250.00       250.00       7.50         7.50      250.00       250.00      5.00     5.00       250.00       250.00
  10.00           250.00       250.00       7.50         7.50      250.00       250.00      5.00     5.00       250.00       250.00
  10.00           250.00       250.00       7.50         7.50      250.00       250.00      5.00     5.00       250.00       250.00
  10.00           250.00       250.00       7.50         7.50      250.00       250.00      5.00     5.00       250.00       250.00
  10.00           250.00       250.00       7.50         7.50      250.00       250.00      5.00     5.00       250.00       250.00
  10.00           250.00       250.00       7.50         7.50      250.00       250.00      5.00     5.00       250.00       250.00
  10.00           250.00       250.00       7.50         7.50      250.00       250.00      5.00     5.00       250.00       250.00
   0.00             0.00         0.00       0.00         0.00        0.00         0.00      0.00     0.00         0.00         0.00
  12.50           250.00       250.00      10.00        10.00      250.00       250.00      7.50     7.50       250.00       250.00
  12.50           250.00       250.00      10.00        10.00      250.00       250.00      7.50     7.50       250.00       250.00
  12.50           250.00       250.00      10.00        10.00      250.00       250.00      7.50     7.50       250.00       250.00
  12.50           250.00       250.00      10.00        10.00      250.00       250.00      7.50     7.50       250.00       250.00
  12.50           250.00       250.00      10.00        10.00      250.00       250.00      7.50     7.50       250.00       250.00
  12.50           250.00       250.00      10.00        10.00      250.00       250.00      7.50     7.50       250.00       250.00
  12.50           250.00       250.00      10.00        10.00      250.00       250.00      7.50     7.50       250.00       250.00
  12.50           250.00       250.00      10.00        10.00      250.00       250.00      7.50     7.50       250.00       250.00
  12.50           250.00       250.00      10.00        10.00      250.00       250.00      7.50     7.50       250.00       250.00
  12.50           250.00       250.00      10.00        10.00      250.00       250.00      7.50     7.50       250.00       250.00
  12.50           250.00       250.00      10.00        10.00      250.00       250.00      7.50     7.50       250.00       250.00
  12.50           250.00       250.00      10.00        10.00      250.00       250.00      7.50     7.50       250.00       250.00
   0.00             0.00         0.00       0.00         0.00        0.00         0.00      0.00     0.00         0.00         0.00
  15.00           250.00       250.00      12.50        12.50      250.00       250.00     10.00    10.00       250.00       250.00
  15.00           250.00       250.00      12.50        12.50      250.00       250.00     10.00    10.00       250.00       250.00
  15.00           250.00       250.00      12.50        12.50      250.00       250.00     10.00    10.00       250.00       250.00
  15.00           250.00       250.00      12.50        12.50      250.00       250.00     10.00    10.00       250.00       250.00
  15.00           250.00       250.00      12.50        12.50      250.00       250.00     10.00    10.00       250.00       250.00
  15.00           250.00       250.00      12.50        12.50      250.00       250.00     10.00    10.00       250.00       250.00
  15.00           250.00       250.00      12.50        12.50      250.00       250.00     10.00    10.00       250.00       250.00
  15.00           250.00       250.00      12.50        12.50      250.00       250.00     10.00    10.00       250.00       250.00
  15.00           250.00       250.00      12.50        12.50      250.00       250.00     10.00    10.00       250.00       250.00
  15.00           250.00       250.00      12.50        12.50      250.00       250.00     10.00    10.00       250.00       250.00
  15.00           250.00       250.00      12.50        12.50      250.00       250.00     10.00    10.00       250.00       250.00
  15.00           250.00       250.00      12.50        12.50      250.00       250.00     10.00    10.00       250.00       250.00
   0.00             0.00         0.00       0.00         0.00        0.00         0.00      0.00     0.00         0.00         0.00
  17.50           250.00       250.00      15.00        15.00      250.00       250.00     12.50    12.50       250.00       250.00
  17.50           250.00       250.00      15.00        15.00      250.00       250.00     12.50    12.50       250.00       250.00
  17.50           250.00       250.00      15.00        15.00      250.00       250.00     12.50    12.50       250.00       250.00
  17.50           250.00       250.00      15.00        15.00      250.00       250.00     12.50    12.50       250.00       250.00
  17.50           250.00       250.00      15.00        15.00      250.00       250.00     12.50    12.50       250.00       250.00
  17.50           250.00       250.00      15.00        15.00      250.00       250.00     12.50    12.50       250.00       250.00
  17.50           250.00       250.00      15.00        15.00      250.00       250.00     12.50    12.50       250.00       250.00
  17.50           250.00       250.00      15.00        15.00      250.00       250.00     12.50    12.50       250.00       250.00
  17.50           250.00       250.00      15.00        15.00      250.00       250.00     12.50    12.50       250.00       250.00
  17.50           250.00       250.00      15.00        15.00      250.00       250.00     12.50    12.50       250.00       250.00
            
<CAPTION> 
                         amt subject to                                   amt subject to                           amt subject to
surrender charge         surrender charge        surrender charge         surrender charge      surrender charge  surrender charge
                             12/31/91                                         12/31/92                                12/31/93
<S>           <C>        <C>                     <C>            <C>       <C>                   <C>            <C>     <C> 
   0.00        0.00                                 0.00         0.00                              0.00         0.00
   0.00        0.00                                 0.00         0.00                              0.00         0.00
   0.00        0.00                                 0.00         0.00                              0.00         0.00
   0.00        0.00                                 0.00         0.00                              0.00         0.00
   0.00        0.00                                 0.00         0.00                              0.00         0.00
   2.50        2.50                                 0.00         0.00                              0.00         0.00
   2.50        2.50                                 0.00         0.00                              0.00         0.00
   2.50        2.50                                 0.00         0.00                              0.00         0.00
   2.50        2.50                                 0.00         0.00                              0.00         0.00
   2.50        2.50                                 0.00         0.00                              0.00         0.00
   2.50        2.50                                 0.00         0.00                              0.00         0.00
   2.50        2.50                                 0.00         0.00                              0.00         0.00
   2.50        2.50                                 0.00         0.00                              0.00         0.00
   2.50        2.50                                 0.00         0.00                              0.00         0.00
   2.50        2.50                                 0.00         0.00                              0.00         0.00
   2.50        2.50                                 0.00         0.00                              0.00         0.00
   2.50        2.50                                 0.00         0.00                              0.00         0.00
   0.00        0.00         0.00         0.00       0.00         0.00                              0.00         0.00
   5.00        5.00       250.00       250.00       2.50         2.50                              0.00         0.00
   5.00        5.00       250.00       250.00       2.50         2.50                              0.00         0.00
   5.00        5.00       250.00       250.00       2.50         2.50                              0.00         0.00
   5.00        5.00       250.00       250.00       2.50         2.50                              0.00         0.00
   5.00        5.00       250.00       250.00       2.50         2.50                              0.00         0.00
   5.00        5.00       250.00       250.00       2.50         2.50                              0.00         0.00
   5.00        5.00       250.00       250.00       2.50         2.50                              0.00         0.00
   5.00        5.00       250.00       250.00       2.50         2.50                              0.00         0.00
   5.00        5.00       250.00       250.00       2.50         2.50                              0.00         0.00
   5.00        5.00       250.00       250.00       2.50         2.50                              0.00         0.00
   5.00        5.00       250.00       250.00       2.50         2.50                              0.00         0.00
   5.00        5.00       250.00       250.00       2.50         2.50                              0.00         0.00
   0.00        0.00         0.00         0.00       0.00         0.00        0.00         0.00     0.00         0.00
   7.50        7.50       250.00       250.00       5.00         5.00      250.00       250.00     2.50         2.50
   7.50        7.50       250.00       250.00       5.00         5.00      250.00       250.00     2.50         2.50
   7.50        7.50       250.00       250.00       5.00         5.00      250.00       250.00     2.50         2.50
   7.50        7.50       250.00       250.00       5.00         5.00      250.00       250.00     2.50         2.50
   7.50        7.50       250.00       250.00       5.00         5.00      250.00       250.00     2.50         2.50
   7.50        7.50       250.00       250.00       5.00         5.00      250.00       250.00     2.50         2.50
   7.50        7.50       250.00       250.00       5.00         5.00      250.00       250.00     2.50         2.50
   7.50        7.50       250.00       250.00       5.00         5.00      250.00       250.00     2.50         2.50
   7.50        7.50       250.00       250.00       5.00         5.00      250.00       250.00     2.50         2.50
   7.50        7.50       250.00       250.00       5.00         5.00      250.00       250.00     2.50         2.50
   7.50        7.50       250.00       250.00       5.00         5.00      250.00       250.00     2.50         2.50
   7.50        7.50       250.00       250.00       5.00         5.00      250.00       250.00     2.50         2.50
   0.00        0.00         0.00         0.00       0.00         0.00        0.00         0.00     0.00         0.00       0.00
  10.00       10.00       250.00       250.00       7.50         7.50      250.00       250.00     5.00         5.00     250.00
  10.00       10.00       250.00       250.00       7.50         7.50      250.00       250.00     5.00         5.00     250.00
  10.00       10.00       250.00       250.00       7.50         7.50      250.00       250.00     5.00         5.00     250.00
  10.00       10.00       250.00       250.00       7.50         7.50      250.00       250.00     5.00         5.00     250.00
  10.00       10.00       250.00       250.00       7.50         7.50      250.00       250.00     5.00         5.00     250.00
  10.00       10.00       250.00       250.00       7.50         7.50      250.00       250.00     5.00         5.00     250.00
  10.00       10.00       250.00       250.00       7.50         7.50      250.00       250.00     5.00         5.00     250.00
  10.00       10.00       250.00       250.00       7.50         7.50      250.00       250.00     5.00         5.00     250.00
  10.00       10.00       250.00       250.00       7.50         7.50      250.00       250.00     5.00         5.00     250.00
  10.00       10.00       250.00       250.00       7.50         7.50      250.00       250.00     5.00         5.00     250.00
</TABLE> 

<PAGE>
 
<TABLE> 
<CAPTION> 
         amt subject to                                    amt subject to                                  amt subject to
         surrender charge        surrender charge          surrender charge        surrender charge        surrender charge
             12/31/88                                          12/31/89                                        12/31/90
<S>      <C>             <C>     <C>              <C>      <C>             <C>     <C>              <C>    <C>             <C> 
 17.50      250.00       250.00      15.00        15.00       250.00       250.00      12.50        12.50     250.00       250.00
 17.50      250.00       250.00      15.00        15.00       250.00       250.00      12.50        12.50     250.00       250.00
  0.00        0.00         0.00       0.00         0.00         0.00         0.00       0.00         0.00       0.00         0.00
            250.00       250.00      17.50        17.50       250.00       250.00      15.00        15.00     250.00       250.00
            250.00       250.00      17.50        17.50       250.00       250.00      15.00        15.00     250.00       250.00
            250.00       250.00      17.50        17.50       250.00       250.00      15.00        15.00     250.00       250.00
            250.00       250.00      17.50        17.50       250.00       250.00      15.00        15.00     250.00       250.00
            250.00       250.00      17.50        17.50       250.00       250.00      15.00        15.00     250.00       250.00
            250.00       250.00      17.50        17.50       250.00       250.00      15.00        15.00     250.00       250.00
            250.00       250.00      17.50        17.50       250.00       250.00      15.00        15.00     250.00       250.00
            250.00       250.00      17.50        17.50       250.00       250.00      15.00        15.00     250.00       250.00
            250.00       250.00      17.50        17.50       250.00       250.00      15.00        15.00     250.00       250.00
            250.00       250.00      17.50        17.50       250.00       250.00      15.00        15.00     250.00       250.00
            250.00       250.00      17.50        17.50       250.00       250.00      15.00        15.00     250.00       250.00
            250.00       250.00      17.50        17.50       250.00       250.00      15.00        15.00     250.00       250.00
              0.00         0.00       0.00         0.00         0.00         0.00       0.00         0.00       0.00         0.00
                                                              250.00       250.00      17.50        17.50     250.00       250.00
                                                              250.00       250.00      17.50        17.50     250.00       250.00
                                                              250.00       250.00      17.50        17.50     250.00       250.00
                                                              250.00       250.00      17.50        17.50     250.00       250.00
                                                              250.00       250.00      17.50        17.50     250.00       250.00
                                                              250.00       250.00      17.50        17.50     250.00       250.00
                                                              250.00       250.00      17.50        17.50     250.00       250.00
                                                              250.00       250.00      17.50        17.50     250.00       250.00
                                                              250.00       250.00      17.50        17.50     250.00       250.00
                                                              250.00       250.00      17.50        17.50     250.00       250.00
                                                              250.00       250.00      17.50        17.50     250.00       250.00
                                                              250.00       250.00      17.50        17.50     250.00       250.00
                                                                0.00         0.00       0.00         0.00       0.00         0.00
                                                                                                              250.00       250.00
                                                                                                              250.00       250.00
                                                                                                              250.00       250.00
                                                                                                              250.00       250.00
                                                                                                              250.00       250.00
                                                                                                              250.00       250.00
                                                                                                              250.00       250.00
                                                                                                              250.00       250.00
                                                                                                              250.00       250.00
                                                                                                              250.00       250.00
                                                                                                              250.00       250.00
                                                                                                              250.00       250.00
                                                                                                                0.00         0.00
<CAPTION> 

                       amt subject to                                  amt subject to                                amt subject to
surrender charge       surrender charge        surrender charge        surrender charge        surrender charge     surrender charge
                           12/31/91                                        12/31/92                                      12/31/93
<S>             <C>    <C>             <C>     <C>              <C>    <C>             <C>     <C>              <C>      <C> 
    10.00       10.00     250.00       250.00       7.50         7.50     250.00       250.00       5.00         5.00     250.00
    10.00       10.00     250.00       250.00       7.50         7.50     250.00       250.00       5.00         5.00     250.00
     0.00        0.00       0.00         0.00       0.00         0.00       0.00         0.00       0.00         0.00       0.00
    12.50       12.50     250.00       250.00      10.00        10.00     250.00       250.00       7.50         7.50     250.00
    12.50       12.50     250.00       250.00      10.00        10.00     250.00       250.00       7.50         7.50     250.00
    12.50       12.50     250.00       250.00      10.00        10.00     250.00       250.00       7.50         7.50     250.00
    12.50       12.50     250.00       250.00      10.00        10.00     250.00       250.00       7.50         7.50     250.00
    12.50       12.50     250.00       250.00      10.00        10.00     250.00       250.00       7.50         7.50     250.00
    12.50       12.50     250.00       250.00      10.00        10.00     250.00       250.00       7.50         7.50     250.00
    12.50       12.50     250.00       250.00      10.00        10.00     250.00       250.00       7.50         7.50     250.00
    12.50       12.50     250.00       250.00      10.00        10.00     250.00       250.00       7.50         7.50     250.00
    12.50       12.50     250.00       250.00      10.00        10.00     250.00       250.00       7.50         7.50     250.00
    12.50       12.50     250.00       250.00      10.00        10.00     250.00       250.00       7.50         7.50     250.00
    12.50       12.50     250.00       250.00      10.00        10.00     250.00       250.00       7.50         7.50     250.00
    12.50       12.50     250.00       250.00      10.00        10.00     250.00       250.00       7.50         7.50     250.00
     0.00        0.00       0.00         0.00       0.00         0.00       0.00         0.00       0.00         0.00       0.00
    15.00       15.00     250.00       250.00      12.50        12.50     250.00       250.00      10.00        10.00     250.00
    15.00       15.00     250.00       250.00      12.50        12.50     250.00       250.00      10.00        10.00     250.00
    15.00       15.00     250.00       250.00      12.50        12.50     250.00       250.00      10.00        10.00     250.00
    15.00       15.00     250.00       250.00      12.50        12.50     250.00       250.00      10.00        10.00     250.00
    15.00       15.00     250.00       250.00      12.50        12.50     250.00       250.00      10.00        10.00     250.00
    15.00       15.00     250.00       250.00      12.50        12.50     250.00       250.00      10.00        10.00     250.00
    15.00       15.00     250.00       250.00      12.50        12.50     250.00       250.00      10.00        10.00     250.00
    15.00       15.00     250.00       250.00      12.50        12.50     250.00       250.00      10.00        10.00     250.00
    15.00       15.00     250.00       250.00      12.50        12.50     250.00       250.00      10.00        10.00     250.00
    15.00       15.00     250.00       250.00      12.50        12.50     250.00       250.00      10.00        10.00     250.00
    15.00       15.00     250.00       250.00      12.50        12.50     250.00       250.00      10.00        10.00     250.00
    15.00       15.00     250.00       250.00      12.50        12.50     250.00       250.00      10.00        10.00     250.00
     0.00        0.00       0.00         0.00       0.00         0.00       0.00         0.00       0.00         0.00       0.00
    17.50       17.50     250.00       250.00      15.00        15.00     250.00       250.00      12.50        12.50     250.00
    17.50       17.50     250.00       250.00      15.00        15.00     250.00       250.00      12.50        12.50     250.00
    17.50       17.50     250.00       250.00      15.00        15.00     250.00       250.00      12.50        12.50     250.00
    17.50       17.50     250.00       250.00      15.00        15.00     250.00       250.00      12.50        12.50     250.00
    17.50       17.50     250.00       250.00      15.00        15.00     250.00       250.00      12.50        12.50     250.00
    17.50       17.50     250.00       250.00      15.00        15.00     250.00       250.00      12.50        12.50     250.00
    17.50       17.50     250.00       250.00      15.00        15.00     250.00       250.00      12.50        12.50     250.00
    17.50       17.50     250.00       250.00      15.00        15.00     250.00       250.00      12.50        12.50     250.00
    17.50       17.50     250.00       250.00      15.00        15.00     250.00       250.00      12.50        12.50     250.00
    17.50       17.50     250.00       250.00      15.00        15.00     250.00       250.00      12.50        12.50     250.00
    17.50       17.50     250.00       250.00      15.00        15.00     250.00       250.00      12.50        12.50     250.00
    17.50       17.50     250.00       250.00      15.00        15.00     250.00       250.00      12.50        12.50     250.00
     0.00        0.00       0.00         0.00       0.00         0.00       0.00         0.00       0.00         0.00       0.00
                          250.00       250.00      17.50        17.50     250.00       250.00      15.00        15.00     250.00
                          250.00       250.00      17.50        17.50     250.00       250.00      15.00        15.00     250.00
                          250.00       250.00      17.50        17.50     250.00       250.00      15.00        15.00     250.00
                          250.00       250.00      17.50        17.50     250.00       250.00      15.00        15.00     250.00
                          250.00       250.00      17.50        17.50     250.00       250.00      15.00        15.00     250.00
                          250.00       250.00      17.50        17.50     250.00       250.00      15.00        15.00     250.00
                          250.00       250.00      17.50        17.50     250.00       250.00      15.00        15.00     250.00
                          250.00       250.00      17.50        17.50     250.00       250.00      15.00        15.00     250.00
                          250.00       250.00      17.50        17.50     250.00       250.00      15.00        15.00     250.00
                          250.00       250.00      17.50        17.50     250.00       250.00      15.00        15.00     250.00
                          250.00       250.00      17.50        17.50     250.00       250.00      15.00        15.00     250.00
                          250.00       250.00      17.50        17.50     250.00       250.00      15.00        15.00     250.00
                            0.00         0.00       0.00         0.00       0.00         0.00       0.00         0.00       0.00
                                                                          250.00       250.00      17.50        17.50     250.00
                                                                          250.00       250.00      17.50        17.50     250.00
</TABLE> 
<PAGE>
 
<TABLE> 
<CAPTION> 

                      amt subject to                           amt subject to                                      amt subject to
surrender charge      surrender charge      surrender charge   surrender charge          surrender charge          surrender charge
                          12/31/91                                 12/31/92                                            12/31/93
<S>                   <C>                   <C>                <C>             <C>        <C>             <C>      <C>  
                                                                  250.00       250.00        17.50        17.50       250.00
                                                                  250.00       250.00        17.50        17.50       250.00
                                                                  250.00       250.00        17.50        17.50       250.00
                                                                  250.00       250.00        17.50        17.50       250.00
                                                                  250.00       250.00        17.50        17.50       250.00
                                                                  250.00       250.00        17.50        17.50       250.00
                                                                  250.00       250.00        17.50        17.50       250.00
                                                                  250.00       250.00        17.50        17.50       250.00
                                                                  250.00       250.00        17.50        17.50       250.00
                                                                  250.00       250.00        17.50        17.50       250.00
                                                                    0.00         0.00         0.00         0.00         0.00
                                                                                                                      250.00
                                                                                                                      250.00
                                                                                                                      250.00
                                                                                                                      250.00
                                                                                                                      250.00
                                                                                                                      250.00
                                                                                                                      250.00
                                                                                                                      250.00
                                                                                                                      250.00
                                                                                                                      250.00
                                                                                                                      250.00
                                                                                                                      250.00
                                                                                                                        0.00
</TABLE> 
<PAGE>
 
<TABLE> 
<CAPTION> 

         amt subject to                                    amt subject to                                    amt subject to
         surrender charge        surrender charge          surrender charge        surrender charge          surrender charge
             12/31/88                                          12/31/89                                          12/31/90
<S>      <C>                     <C>             <C>       <C>                     <C>             <C>       <C> 


690.00                              770.00       770.00                               820.00       820.00

<CAPTION> 

                       amt subject to                                amt subject to                               amt subject to
surrender charge       surrender charge    surrender charge          surrender charge     surrender charge        surrender charge
                           12/31/91                                      12/31/92                                     12/31/93
<S>            <C>     <C>                 <C>             <C>       <C>                  <C>             <C>     <C> 
   840.00      840.00                         840.00       840.00                            840.00       840.00
</TABLE> 

<PAGE>
 
<TABLE> 
<CAPTION> 

amt subject 
to surrender                         amt subject to                                     amt subject to
  charge     surrender charge       surrender charge          surrender charge         surrender charge         surrender charge
 12/31/93                               12/31/94                                           12/31/95
<S>          <C>          <C>     <C>                          <C>          <C>      <C>                         <C>          <C> 
             0.00         0.00                                 0.00         0.00                                 0.00         0.00
             0.00         0.00                                 0.00         0.00                                 0.00         0.00
             0.00         0.00                                 0.00         0.00                                 0.00         0.00
             0.00         0.00                                 0.00         0.00                                 0.00         0.00
             0.00         0.00                                 0.00         0.00                                 0.00         0.00
             0.00         0.00                                 0.00         0.00                                 0.00         0.00
             0.00         0.00                                 0.00         0.00                                 0.00         0.00
             0.00         0.00                                 0.00         0.00                                 0.00         0.00
             0.00         0.00                                 0.00         0.00                                 0.00         0.00
             0.00         0.00                                 0.00         0.00                                 0.00         0.00
             0.00         0.00                                 0.00         0.00                                 0.00         0.00
             0.00         0.00                                 0.00         0.00                                 0.00         0.00
             0.00         0.00                                 0.00         0.00                                 0.00         0.00
             0.00         0.00                                 0.00         0.00                                 0.00         0.00
             0.00         0.00                                 0.00         0.00                                 0.00         0.00
             0.00         0.00                                 0.00         0.00                                 0.00         0.00
             0.00         0.00                                 0.00         0.00                                 0.00         0.00
             0.00         0.00                                 0.00         0.00                                 0.00         0.00
             0.00         0.00                                 0.00         0.00                                 0.00         0.00
             0.00         0.00                                 0.00         0.00                                 0.00         0.00
             0.00         0.00                                 0.00         0.00                                 0.00         0.00
             0.00         0.00                                 0.00         0.00                                 0.00         0.00
             0.00         0.00                                 0.00         0.00                                 0.00         0.00
             0.00         0.00                                 0.00         0.00                                 0.00         0.00
             0.00         0.00                                 0.00         0.00                                 0.00         0.00
             0.00         0.00                                 0.00         0.00                                 0.00         0.00
             0.00         0.00                                 0.00         0.00                                 0.00         0.00
             0.00         0.00                                 0.00         0.00                                 0.00         0.00
             0.00         0.00                                 0.00         0.00                                 0.00         0.00
             0.00         0.00                                 0.00         0.00                                 0.00         0.00
             0.00         0.00                                 0.00         0.00                                 0.00         0.00
             0.00         0.00                                 0.00         0.00                                 0.00         0.00
             0.00         0.00                                 0.00         0.00                                 0.00         0.00
             0.00         0.00                                 0.00         0.00                                 0.00         0.00
             0.00         0.00                                 0.00         0.00                                 0.00         0.00
             0.00         0.00                                 0.00         0.00                                 0.00         0.00
             0.00         0.00                                 0.00         0.00                                 0.00         0.00
             0.00         0.00                                 0.00         0.00                                 0.00         0.00
             0.00         0.00                                 0.00         0.00                                 0.00         0.00
             0.00         0.00                                 0.00         0.00                                 0.00         0.00
             0.00         0.00                                 0.00         0.00                                 0.00         0.00
             0.00         0.00                                 0.00         0.00                                 0.00         0.00
             0.00         0.00                                 0.00         0.00                                 0.00         0.00
   0.00      0.00         0.00                                 0.00         0.00                                 0.00         0.00
 250.00      2.50         2.50                                 0.00         0.00                                 0.00         0.00
 250.00      2.50         2.50                                 0.00         0.00                                 0.00         0.00
 250.00      2.50         2.50                                 0.00         0.00                                 0.00         0.00
 250.00      2.50         2.50                                 0.00         0.00                                 0.00         0.00
 250.00      2.50         2.50                                 0.00         0.00                                 0.00         0.00
 250.00      2.50         2.50                                 0.00         0.00                                 0.00         0.00
 250.00      2.50         2.50                                 0.00         0.00                                 0.00         0.00
 250.00      2.50         2.50                                 0.00         0.00                                 0.00         0.00
 250.00      2.50         2.50                                 0.00         0.00                                 0.00         0.00
 250.00      2.50         2.50                                 0.00         0.00                                 0.00         0.00

<CAPTION> 

    amt subject to                                     amt subject to
   surrender charge         surrender charge          surrender charge          surrender charge
       12/31/96                                           12/31/97
   <C>                          <C>          <C>      <C>                           <C>          <C> 
                                0.00         0.00                                   0.00         0.00
                                0.00         0.00                                   0.00         0.00
                                0.00         0.00                                   0.00         0.00
                                0.00         0.00                                   0.00         0.00
                                0.00         0.00                                   0.00         0.00
                                0.00         0.00                                   0.00         0.00
                                0.00         0.00                                   0.00         0.00
                                0.00         0.00                                   0.00         0.00
                                0.00         0.00                                   0.00         0.00
                                0.00         0.00                                   0.00         0.00
                                0.00         0.00                                   0.00         0.00
                                0.00         0.00                                   0.00         0.00
                                0.00         0.00                                   0.00         0.00
                                0.00         0.00                                   0.00         0.00
                                0.00         0.00                                   0.00         0.00
                                0.00         0.00                                   0.00         0.00
                                0.00         0.00                                   0.00         0.00
                                0.00         0.00                                   0.00         0.00
                                0.00         0.00                                   0.00         0.00
                                0.00         0.00                                   0.00         0.00
                                0.00         0.00                                   0.00         0.00
                                0.00         0.00                                   0.00         0.00
                                0.00         0.00                                   0.00         0.00
                                0.00         0.00                                   0.00         0.00
                                0.00         0.00                                   0.00         0.00
                                0.00         0.00                                   0.00         0.00
                                0.00         0.00                                   0.00         0.00
                                0.00         0.00                                   0.00         0.00
                                0.00         0.00                                   0.00         0.00
                                0.00         0.00                                   0.00         0.00
                                0.00         0.00                                   0.00         0.00
                                0.00         0.00                                   0.00         0.00
                                0.00         0.00                                   0.00         0.00
                                0.00         0.00                                   0.00         0.00
                                0.00         0.00                                   0.00         0.00
                                0.00         0.00                                   0.00         0.00
                                0.00         0.00                                   0.00         0.00
                                0.00         0.00                                   0.00         0.00
                                0.00         0.00                                   0.00         0.00
                                0.00         0.00                                   0.00         0.00
                                0.00         0.00                                   0.00         0.00
                                0.00         0.00                                   0.00         0.00
                                0.00         0.00                                   0.00         0.00
                                0.00         0.00                                   0.00         0.00
                                0.00         0.00                                   0.00         0.00
                                0.00         0.00                                   0.00         0.00
                                0.00         0.00                                   0.00         0.00
                                0.00         0.00                                   0.00         0.00
                                0.00         0.00                                   0.00         0.00
                                0.00         0.00                                   0.00         0.00
                                0.00         0.00                                   0.00         0.00
                                0.00         0.00                                   0.00         0.00
                                0.00         0.00                                   0.00         0.00
                                0.00         0.00                                   0.00         0.00

</TABLE> 
<PAGE>
 
<TABLE> 
<CAPTION> 

amt subject 
to surrender                              amt subject to                                  amt subject to
  charge     surrender charge            surrender charge      surrender charge          surrender charge        surrender charge
 12/31/93                                   12/31/94                                         12/31/95
<S>          <C>          <C>        <C>          <C>          <C>          <C>        <C>                       <C>          <C> 
 250.00      2.50         2.50                                 0.00         0.00                                 0.00         0.00
 250.00      2.50         2.50                                 0.00         0.00                                 0.00         0.00
   0.00      0.00         0.00         0.00         0.00       0.00         0.00                                 0.00         0.00
 250.00      5.00         5.00       250.00       250.00       2.50         2.50                                 0.00         0.00
 250.00      5.00         5.00       250.00       250.00       2.50         2.50                                 0.00         0.00
 250.00      5.00         5.00       250.00       250.00       2.50         2.50                                 0.00         0.00
 250.00      5.00         5.00       250.00       250.00       2.50         2.50                                 0.00         0.00
 250.00      5.00         5.00       250.00       250.00       2.50         2.50                                 0.00         0.00
 250.00      5.00         5.00       250.00       250.00       2.50         2.50                                 0.00         0.00
 250.00      5.00         5.00       250.00       250.00       2.50         2.50                                 0.00         0.00
 250.00      5.00         5.00       250.00       250.00       2.50         2.50                                 0.00         0.00
 250.00      5.00         5.00       250.00       250.00       2.50         2.50                                 0.00         0.00
 250.00      5.00         5.00       250.00       250.00       2.50         2.50                                 0.00         0.00
 250.00      5.00         5.00       250.00       250.00       2.50         2.50                                 0.00         0.00
 250.00      5.00         5.00       250.00       250.00       2.50         2.50                                 0.00         0.00
   0.00      0.00         0.00         0.00         0.00       0.00         0.00         0.00         0.00       0.00         0.00
 250.00      7.50         7.50       250.00       250.00       5.00         5.00       250.00       250.00       2.50         2.50
 250.00      7.50         7.50       250.00       250.00       5.00         5.00       250.00       250.00       2.50         2.50
 250.00      7.50         7.50       250.00       250.00       5.00         5.00       250.00       250.00       2.50         2.50
 250.00      7.50         7.50       250.00       250.00       5.00         5.00       250.00       250.00       2.50         2.50
 250.00      7.50         7.50       250.00       250.00       5.00         5.00       250.00       250.00       2.50         2.50
 250.00      7.50         7.50       250.00       250.00       5.00         5.00       250.00       250.00       2.50         2.50
 250.00      7.50         7.50       250.00       250.00       5.00         5.00       250.00       250.00       2.50         2.50
 250.00      7.50         7.50       250.00       250.00       5.00         5.00       250.00       250.00       2.50         2.50
 250.00      7.50         7.50       250.00       250.00       5.00         5.00       250.00       250.00       2.50         2.50
 250.00      7.50         7.50       250.00       250.00       5.00         5.00       250.00       250.00       2.50         2.50
 250.00      7.50         7.50       250.00       250.00       5.00         5.00       250.00       250.00       2.50         2.50
 250.00      7.50         7.50       250.00       250.00       5.00         5.00       250.00       250.00       2.50         2.50
   0.00      0.00         0.00         0.00         0.00       0.00         0.00         0.00         0.00       0.00         0.00
 250.00     10.00        10.00       250.00       250.00       7.50         7.50       250.00       250.00       5.00         5.00
 250.00     10.00        10.00       250.00       250.00       7.50         7.50       250.00       250.00       5.00         5.00
 250.00     10.00        10.00       250.00       250.00       7.50         7.50       250.00       250.00       5.00         5.00
 250.00     10.00        10.00       250.00       250.00       7.50         7.50       250.00       250.00       5.00         5.00
 250.00     10.00        10.00       250.00       250.00       7.50         7.50       250.00       250.00       5.00         5.00
 250.00     10.00        10.00       250.00       250.00       7.50         7.50       250.00       250.00       5.00         5.00
 250.00     10.00        10.00       250.00       250.00       7.50         7.50       250.00       250.00       5.00         5.00
 250.00     10.00        10.00       250.00       250.00       7.50         7.50       250.00       250.00       5.00         5.00
 250.00     10.00        10.00       250.00       250.00       7.50         7.50       250.00       250.00       5.00         5.00
 250.00     10.00        10.00       250.00       250.00       7.50         7.50       250.00       250.00       5.00         5.00
 250.00     10.00        10.00       250.00       250.00       7.50         7.50       250.00       250.00       5.00         5.00
 250.00     10.00        10.00       250.00       250.00       7.50         7.50       250.00       250.00       5.00         5.00
   0.00      0.00         0.00         0.00         0.00       0.00         0.00         0.00         0.00       0.00         0.00
 250.00     12.50        12.50       250.00       250.00      10.00        10.00       250.00       250.00       7.50         7.50
 250.00     12.50        12.50       250.00       250.00      10.00        10.00       250.00       250.00       7.50         7.50
 250.00     12.50        12.50       250.00       250.00      10.00        10.00       250.00       250.00       7.50         7.50
 250.00     12.50        12.50       250.00       250.00      10.00        10.00       250.00       250.00       7.50         7.50
 250.00     12.50        12.50       250.00       250.00      10.00        10.00       250.00       250.00       7.50         7.50
 250.00     12.50        12.50       250.00       250.00      10.00        10.00       250.00       250.00       7.50         7.50
 250.00     12.50        12.50       250.00       250.00      10.00        10.00       250.00       250.00       7.50         7.50
 250.00     12.50        12.50       250.00       250.00      10.00        10.00       250.00       250.00       7.50         7.50
 250.00     12.50        12.50       250.00       250.00      10.00        10.00       250.00       250.00       7.50         7.50
 250.00     12.50        12.50       250.00       250.00      10.00        10.00       250.00       250.00       7.50         7.50
 250.00     12.50        12.50       250.00       250.00      10.00        10.00       250.00       250.00       7.50         7.50
 250.00     12.50        12.50       250.00       250.00      10.00        10.00       250.00       250.00       7.50         7.50
   0.00      0.00         0.00         0.00         0.00       0.00         0.00         0.00         0.00       0.00         0.00
 250.00     15.00        15.00       250.00       250.00      12.50        12.50       250.00       250.00      10.00        10.00
 250.00     15.00        15.00       250.00       250.00      12.50        12.50       250.00       250.00      10.00        10.00

<CAPTION> 

   amt subject to                                       amt subject to
  surrender charge           surrender charge          surrender charge          surrender charge
      12/31/96                                             12/31/97
<S>                            <C>          <C>        <C>                         <C>          <C> 
                               0.00         0.00                                   0.00         0.00
                               0.00         0.00                                   0.00         0.00
                               0.00         0.00                                   0.00         0.00
                               0.00         0.00                                   0.00         0.00
                               0.00         0.00                                   0.00         0.00
                               0.00         0.00                                   0.00         0.00
                               0.00         0.00                                   0.00         0.00
                               0.00         0.00                                   0.00         0.00
                               0.00         0.00                                   0.00         0.00
                               0.00         0.00                                   0.00         0.00
                               0.00         0.00                                   0.00         0.00
                               0.00         0.00                                   0.00         0.00
                               0.00         0.00                                   0.00         0.00
                               0.00         0.00                                   0.00         0.00
                               0.00         0.00                                   0.00         0.00
                               0.00         0.00                                   0.00         0.00
                               0.00         0.00                                   0.00         0.00
                               0.00         0.00                                   0.00         0.00
                               0.00         0.00                                   0.00         0.00
                               0.00         0.00                                   0.00         0.00
                               0.00         0.00                                   0.00         0.00
                               0.00         0.00                                   0.00         0.00
                               0.00         0.00                                   0.00         0.00
                               0.00         0.00                                   0.00         0.00
                               0.00         0.00                                   0.00         0.00
                               0.00         0.00                                   0.00         0.00
                               0.00         0.00                                   0.00         0.00
                               0.00         0.00                                   0.00         0.00
      0.00        0.00         0.00         0.00                                   0.00         0.00
    250.00      250.00         2.50         2.50                                   0.00         0.00
    250.00      250.00         2.50         2.50                                   0.00         0.00
    250.00      250.00         2.50         2.50                                   0.00         0.00
    250.00      250.00         2.50         2.50                                   0.00         0.00
    250.00      250.00         2.50         2.50                                   0.00         0.00
    250.00      250.00         2.50         2.50                                   0.00         0.00
    250.00      250.00         2.50         2.50                                   0.00         0.00
    250.00      250.00         2.50         2.50                                   0.00         0.00
    250.00      250.00         2.50         2.50                                   0.00         0.00
    250.00      250.00         2.50         2.50                                   0.00         0.00
    250.00      250.00         2.50         2.50                                   0.00         0.00
    250.00      250.00         2.50         2.50                                   0.00         0.00
      0.00        0.00         0.00         0.00         0.00         0.00         0.00         0.00
    250.00      250.00         5.00         5.00       250.00       250.00         2.50         2.50
    250.00      250.00         5.00         5.00       250.00       250.00         2.50         2.50
    250.00      250.00         5.00         5.00       250.00       250.00         2.50         2.50
    250.00      250.00         5.00         5.00       250.00       250.00         2.50         2.50
    250.00      250.00         5.00         5.00       250.00       250.00         2.50         2.50
    250.00      250.00         5.00         5.00       250.00       250.00         2.50         2.50
    250.00      250.00         5.00         5.00       250.00       250.00         2.50         2.50
    250.00      250.00         5.00         5.00       250.00       250.00         2.50         2.50
    250.00      250.00         5.00         5.00       250.00       250.00         2.50         2.50
    250.00      250.00         5.00         5.00       250.00       250.00         2.50         2.50
    250.00      250.00         5.00         5.00       250.00       250.00         2.50         2.50
    250.00      250.00         5.00         5.00       250.00       250.00         2.50         2.50
      0.00        0.00         0.00         0.00         0.00         0.00         0.00         0.00
    250.00      250.00         7.50         7.50       250.00       250.00         5.00         5.00
    250.00      250.00         7.50         7.50       250.00       250.00         5.00         5.00

</TABLE> 
<PAGE>
 
<TABLE> 
<CAPTION> 

amt subject 
to surrender                           amt subject to                                    amt subject to
  charge    surrender charge          surrender charge      surrender charge            surrender charge      surrender charge
 12/31/93                                 12/31/94                                          12/31/95
<S>         <C>          <C>         <C>          <C>         <C>          <C>         <C>          <C>         <C>          <C> 
 250.00     15.00        15.00       250.00       250.00      12.50        12.50       250.00       250.00      10.00        10.00
 250.00     15.00        15.00       250.00       250.00      12.50        12.50       250.00       250.00      10.00        10.00
 250.00     15.00        15.00       250.00       250.00      12.50        12.50       250.00       250.00      10.00        10.00
 250.00     15.00        15.00       250.00       250.00      12.50        12.50       250.00       250.00      10.00        10.00
 250.00     15.00        15.00       250.00       250.00      12.50        12.50       250.00       250.00      10.00        10.00
 250.00     15.00        15.00       250.00       250.00      12.50        12.50       250.00       250.00      10.00        10.00
 250.00     15.00        15.00       250.00       250.00      12.50        12.50       250.00       250.00      10.00        10.00
 250.00     15.00        15.00       250.00       250.00      12.50        12.50       250.00       250.00      10.00        10.00
 250.00     15.00        15.00       250.00       250.00      12.50        12.50       250.00       250.00      10.00        10.00
 250.00     15.00        15.00       250.00       250.00      12.50        12.50       250.00       250.00      10.00        10.00
   0.00      0.00         0.00         0.00         0.00       0.00         0.00         0.00         0.00       0.00         0.00
 250.00     17.50        17.50       250.00       250.00      15.00        15.00       250.00       250.00      12.50        12.50
 250.00     17.50        17.50       250.00       250.00      15.00        15.00       250.00       250.00      12.50        12.50
 250.00     17.50        17.50       250.00       250.00      15.00        15.00       250.00       250.00      12.50        12.50
 250.00     17.50        17.50       250.00       250.00      15.00        15.00       250.00       250.00      12.50        12.50
 250.00     17.50        17.50       250.00       250.00      15.00        15.00       250.00       250.00      12.50        12.50
 250.00     17.50        17.50       250.00       250.00      15.00        15.00       250.00       250.00      12.50        12.50
 250.00     17.50        17.50       250.00       250.00      15.00        15.00       250.00       250.00      12.50        12.50
 250.00     17.50        17.50       250.00       250.00      15.00        15.00       250.00       250.00      12.50        12.50
 250.00     17.50        17.50       250.00       250.00      15.00        15.00       250.00       250.00      12.50        12.50
 250.00     17.50        17.50       250.00       250.00      15.00        15.00       250.00       250.00      12.50        12.50
 250.00     17.50        17.50       250.00       250.00      15.00        15.00       250.00       250.00      12.50        12.50
 250.00     17.50        17.50       250.00       250.00      15.00        15.00       250.00       250.00      12.50        12.50
   0.00      0.00         0.00         0.00         0.00       0.00         0.00         0.00         0.00       0.00         0.00
                                     250.00       250.00      17.50        17.50       250.00       250.00      15.00        15.00
                                     250.00       250.00      17.50        17.50       250.00       250.00      15.00        15.00
                                     250.00       250.00      17.50        17.50       250.00       250.00      15.00        15.00
                                     250.00       250.00      17.50        17.50       250.00       250.00      15.00        15.00
                                     250.00       250.00      17.50        17.50       250.00       250.00      15.00        15.00
                                     250.00       250.00      17.50        17.50       250.00       250.00      15.00        15.00
                                     250.00       250.00      17.50        17.50       250.00       250.00      15.00        15.00
                                     250.00       250.00      17.50        17.50       250.00       250.00      15.00        15.00
                                     250.00       250.00      17.50        17.50       250.00       250.00      15.00        15.00
                                     250.00       250.00      17.50        17.50       250.00       250.00      15.00        15.00
                                     250.00       250.00      17.50        17.50       250.00       250.00      15.00        15.00
                                     250.00       250.00      17.50        17.50       250.00       250.00      15.00        15.00
                                       0.00         0.00       0.00         0.00         0.00         0.00       0.00         0.00
                                                                                       250.00       250.00      17.50        17.50
                                                                                       250.00       250.00      17.50        17.50
                                                                                       250.00       250.00      17.50        17.50
                                                                                       250.00       250.00      17.50        17.50
                                                                                       250.00       250.00      17.50        17.50
                                                                                       250.00       250.00      17.50        17.50
                                                                                       250.00       250.00      17.50        17.50
                                                                                       250.00       250.00      17.50        17.50
                                                                                       250.00       250.00      17.50        17.50
                                                                                       250.00       250.00      17.50        17.50
                                                                                       250.00       250.00      17.50        17.50
                                                                                       250.00       250.00      17.50        17.50
                                                                                         0.00         0.00       0.00         0.00

<CAPTION> 

      amt subject to                                      amt subject to
     surrender charge       surrender charge            surrender charge        surrender charge
        12/31/96                                            12/31/97
   <S>         <C>            <C>          <C>        <C>          <C>            <C>          <C> 
   250.00      250.00         7.50         7.50       250.00       250.00         5.00         5.00
   250.00      250.00         7.50         7.50       250.00       250.00         5.00         5.00
   250.00      250.00         7.50         7.50       250.00       250.00         5.00         5.00
   250.00      250.00         7.50         7.50       250.00       250.00         5.00         5.00
   250.00      250.00         7.50         7.50       250.00       250.00         5.00         5.00
   250.00      250.00         7.50         7.50       250.00       250.00         5.00         5.00
   250.00      250.00         7.50         7.50       250.00       250.00         5.00         5.00
   250.00      250.00         7.50         7.50       250.00       250.00         5.00         5.00
   250.00      250.00         7.50         7.50       250.00       250.00         5.00         5.00
   250.00      250.00         7.50         7.50       250.00       250.00         5.00         5.00
     0.00        0.00         0.00         0.00         0.00         0.00         0.00         0.00
   250.00      250.00        10.00        10.00       250.00       250.00         7.50         7.50
   250.00      250.00        10.00        10.00       250.00       250.00         7.50         7.50
   250.00      250.00        10.00        10.00       250.00       250.00         7.50         7.50
   250.00      250.00        10.00        10.00       250.00       250.00         7.50         7.50
   250.00      250.00        10.00        10.00       250.00       250.00         7.50         7.50
   250.00      250.00        10.00        10.00       250.00       250.00         7.50         7.50
   250.00      250.00        10.00        10.00       250.00       250.00         7.50         7.50
   250.00      250.00        10.00        10.00       250.00       250.00         7.50         7.50
   250.00      250.00        10.00        10.00       250.00       250.00         7.50         7.50
   250.00      250.00        10.00        10.00       250.00       250.00         7.50         7.50
   250.00      250.00        10.00        10.00       250.00       250.00         7.50         7.50
   250.00      250.00        10.00        10.00       250.00       250.00         7.50         7.50
     0.00        0.00         0.00         0.00         0.00         0.00         0.00         0.00
   250.00      250.00        12.50        12.50       250.00       250.00        10.00        10.00
   250.00      250.00        12.50        12.50       250.00       250.00        10.00        10.00
   250.00      250.00        12.50        12.50       250.00       250.00        10.00        10.00
   250.00      250.00        12.50        12.50       250.00       250.00        10.00        10.00
   250.00      250.00        12.50        12.50       250.00       250.00        10.00        10.00
   250.00      250.00        12.50        12.50       250.00       250.00        10.00        10.00
   250.00      250.00        12.50        12.50       250.00       250.00        10.00        10.00
   250.00      250.00        12.50        12.50       250.00       250.00        10.00        10.00
   250.00      250.00        12.50        12.50       250.00       250.00        10.00        10.00
   250.00      250.00        12.50        12.50       250.00       250.00        10.00        10.00
   250.00      250.00        12.50        12.50       250.00       250.00        10.00        10.00
   250.00      250.00        12.50        12.50       250.00       250.00        10.00        10.00
     0.00        0.00         0.00         0.00         0.00         0.00         0.00         0.00
   250.00      250.00        15.00        15.00       250.00       250.00        12.50        12.50
   250.00      250.00        15.00        15.00       250.00       250.00        12.50        12.50
   250.00      250.00        15.00        15.00       250.00       250.00        12.50        12.50
   250.00      250.00        15.00        15.00       250.00       250.00        12.50        12.50
   250.00      250.00        15.00        15.00       250.00       250.00        12.50        12.50
   250.00      250.00        15.00        15.00       250.00       250.00        12.50        12.50
   250.00      250.00        15.00        15.00       250.00       250.00        12.50        12.50
   250.00      250.00        15.00        15.00       250.00       250.00        12.50        12.50
   250.00      250.00        15.00        15.00       250.00       250.00        12.50        12.50
   250.00      250.00        15.00        15.00       250.00       250.00        12.50        12.50
   250.00      250.00        15.00        15.00       250.00       250.00        12.50        12.50
   250.00      250.00        15.00        15.00       250.00       250.00        12.50        12.50
     0.00        0.00         0.00         0.00         0.00         0.00         0.00         0.00
   250.00      250.00        17.50        17.50       250.00       250.00        15.00        15.00
   250.00      250.00        17.50        17.50       250.00       250.00        15.00        15.00
   250.00      250.00        17.50        17.50       250.00       250.00        15.00        15.00
   250.00      250.00        17.50        17.50       250.00       250.00        15.00        15.00
   250.00      250.00        17.50        17.50       250.00       250.00        15.00        15.00
   250.00      250.00        17.50        17.50       250.00       250.00        15.00        15.00
   250.00      250.00        17.50        17.50       250.00       250.00        15.00        15.00

</TABLE> 
<PAGE>
 
<TABLE> 
<CAPTION> 

amt subject 
to surrender                              amt subject to                                      amt subject to
  charge     surrender charge            surrender charge      surrender charge             surrender charge     surrender charge
 12/31/93                                   12/31/94                                            12/31/95
<S>          <C>          <C>          <C>       <C>           <C>          <C>           <C>       <C>          <C>          <C> 
             840.00       840.00                               840.00       840.00                               840.00       840.00

<CAPTION> 

      amt subject to                                     amt subject to
     surrender charge      surrender charge            surrender charge        surrender charge
        12/31/96                                           12/31/97
   <S>         <C>           <C>          <C>         <C>          <C>           <C>          <C> 
   250.00      250.00        17.50        17.50       250.00       250.00        15.00        15.00
   250.00      250.00        17.50        17.50       250.00       250.00        15.00        15.00
   250.00      250.00        17.50        17.50       250.00       250.00        15.00        15.00
   250.00      250.00        17.50        17.50       250.00       250.00        15.00        15.00
   250.00      250.00        17.50        17.50       250.00       250.00        15.00        15.00
     0.00        0.00         0.00         0.00         0.00         0.00         0.00         0.00
                                                      250.00       250.00        17.50        17.50
                                                      250.00       250.00        17.50        17.50
                                                      250.00       250.00        17.50        17.50
                                                      250.00       250.00        17.50        17.50
                                                      250.00       250.00        17.50        17.50
                                                      250.00       250.00        17.50        17.50
                                                      250.00       250.00        17.50        17.50
                                                      250.00       250.00        17.50        17.50
                                                      250.00       250.00        17.50        17.50
                                                      250.00       250.00        17.50        17.50
                                                      250.00       250.00        17.50        17.50
                                                      250.00       250.00        17.50        17.50
                                                        0.00         0.00         0.00         0.00

                            840.00       840.00                                 840.00       840.00

</TABLE> 
<PAGE>
 
                                 Hypotheticals

                           HYPOTHETICAL PERFORMANCE
                            FOR A CONTRACT BASED ON
               AVERAGE ANNUAL TOTAL RETURNS FOR BOND INCOME FUND


<TABLE> 
<CAPTION> 

Period Ending:              12/31/97
                            
1 Year                         0.60%
5 Year                         4.24%
10 Year                        6.03%
since inception of fund        6.97%


<S>              <C>            <C>         <C>                        <C>          <C>          <C>       <C> 
    8/26/83             1       1000           1000                    12/31/87     1.524994     1000      1000.00
    8/26/84       1.05846        -30        1028.46                    12/31/88     1.629605      -30      1038.60
    8/26/85      1.261261        -30        1195.51                    12/31/89     1.804627      -30      1120.14
    8/26/86      1.475417        -30        1368.51                    12/31/90     1.923323      -30      1163.82
    8/26/87      1.508749        -30        1369.42                    12/31/91     2.237207      -30      1323.75
    8/26/88      1.589113        -30        1412.36                    12/31/92      2.38647      -30      1382.07
    8/26/89      1.755132        -30        1529.92                    12/31/93     2.650071      -30      1504.73
    8/26/90      1.816183        -30        1553.14                    12/31/94     2.525427      -30      1403.96
    8/26/91      2.058539        -30        1730.39                    12/31/95     3.018347      -30      1647.99
    8/26/92      2.365524        -30        1958.44                    12/31/96      3.11325      -30      1669.80
    8/26/93      2.645691        -30        2160.39                    12/31/97     3.404265      -30      1795.89
    8/26/94      2.554724        -30        2056.11
    8/26/95      2.849594        -30        2263.43                                                          6.03%
    8/26/96      2.970752        -30        2329.67
    8/26/97      3.263923        -30        2529.57
   12/31/97      3.404265        -10        2628.34
                            
# leap years                       4          6.97%
                            
                            
    4/19/95      2.684861       1000           1000
    4/19/96      2.923538        -30        1058.90
    4/19/97      3.103022        -30        1093.91
   12/31/97      3.404265        -20        1180.10
                                             180.10
                                                 50
                                            1130.10
                            
                                              4.63%
                            
<CAPTION>                   
<S>              <C>            <C>         <C>                        <C>          <C>          <C>       <C> 
                                               1000
   12/31/92       2.38647       1000        1000.00                    12/31/96       3.11325     1000.00     1000.00
   12/31/93      2.650071        -30        1080.46                    12/31/97      3.404265      -30.00     1063.48
   12/31/94      2.525427        -30         999.64                                                            106.35
   12/31/95      3.018347        -30        1164.75                                                          57.42772
   12/31/96      3.11325         -30        1171.37                                                           1006.05
   12/31/97      3.404265        -30        1250.87
                                             250.87                                                             0.60%
                                                 20                        0.07
                                            1230.87                        0.06
                                                                           0.05
                                              4.24%                        0.04
                                                                           0.03
                                                                           0.02
                                                                           0.01

</TABLE> 
<PAGE>
 

                           HYPOTHETICAL PERFORMANCE
                            FOR A CONTRACT BASED ON
              AVERAGE ANNUAL TOTAL RETURNS FOR MONEY MARKET FUND

<TABLE> 
<CAPTION> 

Period Ending:          12/31/97

1 Year                    -4.57%
5 Year                    -0.23%
10 Year                    1.61%
since inception-fund       2.62%

<S>           <C>           <C>          <C>                  <C>           <C>          <C>      <C> 
  8/26/83            1      1000            1000              12/31/87      1.324361     1000     1000.00
  8/26/84     1.086065       -30         1056.07              12/31/88      1.404131      -30     1030.23
  8/26/85     1.171456       -30         1109.10              12/31/89      1.512813      -30     1079.97
  8/26/86     1.242008       -30         1145.89              12/31/90      1.613903      -30     1122.14
  8/26/87     1.299486       -30         1168.92              12/31/91      1.690352      -30     1145.30
  8/26/88      1.37259       -30         1204.68              12/31/92      1.730096      -30     1142.22
  8/26/89     1.476103       -30         1265.53              12/31/93      1.756748      -30     1129.82
  8/26/90     1.578273       -30         1323.13              12/31/94       1.80118      -30     1128.40
  8/26/91      1.66737       -30         1367.82              12/31/95      1.877438      -30     1146.17
  8/26/92     1.719545       -30         1380.62              12/31/96      1.946086      -30     1158.08
  8/26/93     1.747508       -30         1373.07              12/31/97      2.021482      -30     1172.95
  8/26/94      1.78025       -30         1368.80       
  8/26/95     1.851345       -30         1393.47                                                    1.61%
  8/26/96      1.92185       -30         1416.53       
  8/26/97     1.994481       -30         1440.07       
 12/31/97     2.021482       -10         1449.56       

# leap years                   4           2.62%


  4/19/95     1.824171      1000            1000
  4/19/96     1.897988       -30         1010.47
  4/19/97     1.967275       -30         1017.35
 12/31/97     2.021482       -20         1025.39
                                          102.54
                                           46.14
                                          979.24

                                          -0.77%
<CAPTION> 

 <S>          <C>           <C>         <C>                   <C>           <C>           <C>         <C> 
 12/31/92     1.730096      1000         1000.00              12/31/96      1.946086      1000.00      1000.00
 12/31/93     1.756748       -30          985.40              12/31/97      2.021482       -30.00      1008.74
 12/31/94     1.80118        -30          980.33                                                        100.87
 12/31/95     1.877438       -30          991.83                                                      54.47209
 12/31/96     1.946086       -30          998.10                                                        954.27
 12/31/97     2.021482       -30         1006.77
                                          100.68                                                        -4.57%
                                        18.12182

                                          988.65

                                          -0.23%

</TABLE> 
<PAGE>
 
<TABLE> 
<CAPTION> 

CALCULATION       $10,000   Single Payment                      0 :Prem Tax

Contract Values
                    34.29      Growth                                                 Growth
                   Midcap    and Income                                 Midcap      and Income                   Surr chrg calc
                       CV           CV     Paymts           Fee           UV's          UV's
    <S>         <C>          <C>          <C>               <C>       <C>           <C>                 <C>      <C> 
      5/1/93    10,000.00    10,000.00    $10,000             0              1             1
    12/31/93    11,366.57    11,317.31          0             0       1.136657      1.131731            1             0.07
      5/1/94    10,833.90    10,882.70          0           -30        1.08639       1.09127            2             0.06
    12/31/94    11,147.74    10,995.38          0             0       1.117861      1.102569            2             0.06
      5/1/95    12,096.88    12,165.79          0           -30       1.216046      1.222941            3             0.05
    12/31/95    14,294.36    14,760.65          0             0       1.436949      1.483784            3             0.05
      5/1/96    15,571.91    15,478.82          0           -30       1.568391      1.558992            4             0.04
    12/31/96    16,543.96    17,154.34          0             0       1.666295      1.727747            4             0.04
      5/1/97    16,380.93    18,218.40          0           -30       1.652897      1.837938            5             0.03
    12/31/97    19,105.05    22,540.94          0             0       1.927771      2.274012            5             0.03

<CAPTION> 

                                     $10,000 Single Payment

       Surrender Values               No Premium Tax                     free withdrawal amount
                                        Growth                                          Growth 
                           Midcap     and Income                          Midcap      and Income
  <S>  <C>               <C>          <C>                 <C>          <C>            <C> 
  8        12/31/93      10,646.57       10,597.31        12/31/93       1366.57        1317.31
  0          5/1/94
  8        12/31/94      10,527.74       10,380.95        12/31/94      1147.741        1088.27
  0          5/1/95
  8        12/31/95      13,774.36       14,240.65        12/31/95      4294.356       4760.651
  0          5/1/96
  8        12/31/96      16,123.96       16,734.34        12/31/95      6543.956       7154.342
  0          5/1/97
  8        12/31/97      18,785.05       22,220.94        12/31/95      9105.054       12540.94

</TABLE> 
<PAGE>
 
<TABLE> 
<CAPTION> 

CALCULATION                   $250 Payment per month              Prem tax:              0

                                  No Premium Tax

            Cumulative       Midcap         Growth                      Net
              Payments       Growth       and Income   Paymts        Paymts            Fee                 UV's           UV's
<S>         <C>            <C>            <C>          <C>           <C>               <C>             <C>            <C> 
   5/1/93          250       250.00         250.00        250           250              0                    1              1
   6/1/93          500       510.08         509.26        250           250              0             1.040326       1.037029
   7/1/93          750       760.72         760.44        250           250              0             1.041625       1.039429
   8/1/93        1,000     1,011.98       1,019.58        250           250              0             1.043356       1.051926
   9/1/93        1,250     1,310.23       1,299.06        250           250              0             1.093097       1.082347
  10/1/93        1,500     1,598.28       1,575.49        250           250              0             1.124845       1.104365
  11/1/93        1,750     1,855.27       1,856.34        250           250              0             1.129764       1.125991
  12/1/93        2,000     2,078.22       2,081.15        250           250              0             1.113288       1.110711
 12/31/93        2,000     2,121.84       2,120.54          0             0              0             1.136657       1.131731
   1/1/94        2,250     2,371.84       2,370.54        250           250              0             1.136657       1.131731
   2/1/94        2,500     2,691.45       2,664.00        250           250              0             1.170017       1.152483
   3/1/94        2,750     2,872.47       2,864.90        250           250              0             1.140031       1.131242
   4/1/94        3,000     2,994.13       2,982.42        250           250              0             1.089095        1.07893
   5/1/94        3,250     3,206.70       3,236.53        250           250            -30              1.08639        1.09127
   6/1/94        3,500     3,440.89       3,462.82        250           250              0             1.081037       1.083276
   7/1/94        3,750     3,578.85       3,642.95        250           250              0             1.045835       1.061418
   8/1/94        4,000     3,930.15       3,966.49        250           250              0             1.075437       1.082844
   9/1/94        4,250     4,280.82       4,288.56        250           250              0             1.102985        1.10252
  10/1/94        4,500     4,499.56       4,444.20        250           250              0             1.094931        1.07826
  11/1/94        4,750     4,908.93       4,822.15        250           250              0             1.133713       1.109304
  12/1/94        5,000     4,949.41       4,920.88        250           250              0             1.085323       1.074506
 12/31/94        5,000     5,097.79       5,049.40          0             0              0             1.117861       1.102569
   1/1/95        5,250     5,347.79       5,299.40        250           250              0             1.117861       1.102569
   2/1/95        5,500     5,634.12       5,632.99        250           250              0             1.125455        1.11996
   3/1/95        5,750     6,089.48       6,030.20        250           250              0             1.166477       1.149228
   4/1/95        6,000     6,531.03       6,441.95        250           250              0             1.203169       1.180054
   5/1/95        6,250     6,820.92       6,896.07        250           250            -30             1.216046       1.222941
   6/1/95        6,500     7,317.66       7,369.19        250           250              0             1.260034       1.262509
   7/1/95        6,750     7,982.59       7,950.99        250           250              0             1.331482       1.319354
   8/1/95        7,000     8,488.07       8,426.99        250           250              0             1.374095       1.356856
   9/1/95        7,250     8,972.45       8,857.38        250           250              0             1.412038       1.385901
  10/1/95        7,500     9,502.70       9,425.36        250           250              0             1.456142       1.435655
  11/1/95        7,750     9,656.26       9,557.78        250           250              0             1.441365       1.417745
  12/1/95        8,000     9,984.97      10,053.89        250           250              0             1.453113       1.454252
 12/31/95        8,000     9,873.90      10,258.06          0             0              0             1.436949       1.483784
   1/1/96        8,250    10,123.90      10,508.06        250           250              0             1.436949       1.483784
   2/1/96        8,500    10,676.58      11,042.19        250           250              0             1.479911       1.523904
   3/1/96        8,750    11,019.98      11,415.76        250           250              0             1.492857       1.540958

<CAPTION> 

             Surrender Values              surrender charge

          Midcap           Growth        Midcap          Growth
          Growth         and Income      Growth        and Income
          <C>            <C>             <C>           <C> 

  0
  1
  2
  3
  4
  5
  6
  7
  8       1,961.84       1,960.54         140.00        140.00
  8
  9
 10
 11
  0
  1
  2
  3
  4
  5
  6
  7
  8       4,763.39       4,718.60         314.40        310.80
  8
  9
 10
 11
  0
  1
  2
  3
  4
  5
  6
  7
  8       9,363.90       9,748.06         490.00        490.00
  8
  9
 10
</TABLE> 
<PAGE>
 
<TABLE> 
<CAPTION> 

CALCULATION                      $250 Payment per month      Prem tax:                   0

                                     No Premium Tax

          Cumulative         Midcap        Growth                       Net
            Payments         Growth      and Income    Paymts        Paymts            Fee                 UV's           UV's
<S>       <C>             <C>            <C>           <C>           <C>               <C>             <C>            <C> 
   4/1/96      9,000      11,366.00      11,794.07        250           250              0             1.505864       1.558278
   5/1/96      9,250      12,057.94      12,019.48        250           250            -30             1.568391       1.558992
   6/1/96      9,500      12,576.28      12,409.38        250           250              0             1.603294       1.577138
   7/1/96      9,750      12,806.63      12,464.96        250           250              0             1.600789       1.552429
   8/1/96     10,000      12,266.50      12,197.56        250           250              0             1.502026        1.48799
   9/1/96     10,250      12,709.35      12,567.87        250           250              0              1.52564       1.502667
  10/1/96     10,500      13,962.70      13,440.96        250           250              0             1.646083       1.577166
  11/1/96     10,750      14,178.96      14,033.14        250           250              0             1.642105       1.617318
  12/1/96     11,000      15,163.92      15,516.75        250           250              0             1.727223       1.759491
 12/31/96     11,000      14,629.01      15,236.80          0             0              0             1.666295       1.727747
   1/1/97     11,250      14,879.01      15,486.80        250           250              0             1.666295       1.727747
   2/1/97     11,500      15,942.31      16,497.09        250           250              0             1.757376       1.812566
   3/1/97     11,750      15,757.82      16,990.96        250           250              0             1.709481       1.839361
   4/1/97     12,000      14,797.18      16,489.67        250           250              0             1.578145        1.75803
   5/1/97     12,250      15,718.08      17,459.18        250           250            -30             1.652897       1.837938
   6/1/97     12,500      17,271.58      18,820.98        250           250              0             1.789972       1.954978
   7/1/97     12,750      18,022.09      20,093.80        250           250              0             1.841843       2.061221
   8/1/97     13,000      19,419.23      21,393.33        250           250              0              1.95908       2.168881
   9/1/97     13,250      18,825.91      21,104.16        250           250              0             1.874003        2.11422
  10/1/97     13,500      19,651.81      22,779.52        250           250              0              1.93133       2.257012
  11/1/97     13,750      19,070.22      21,888.11        250           250              0             1.849603       2.143921
  12/1/97     14,000      20,146.76      23,373.09        250           250              0             1.929769       2.264886
 12/31/97     14,000      20,125.90      23,467.27          0             0              0             1.927771       2.274012

<CAPTION> 

             Surrender Values               surrender charge

          Midcap            Growth        Midcap          Growth
          Growth          and Income      Growth        and Income
  <S>     <C>             <C>             <C>           <C> 
  11
   0
   1
   2
   3
   4
   5
   6
   7
   8      13,989.01      14,596.80         620.00        620.00
   8
   9
  10
  11
   0
   1
   2
   3
   4
   5
   6
   7
   8      19,385.90      22,727.27         720.00        720.00

</TABLE> 
<PAGE>
 
<TABLE> 
<CAPTION> 

                     free withdrawal amt
                                   amt subject to                                    amt subject to
              Midcap      Growth     surr charge          surrender charge            surr charge           surrender charge
              Growth    and Income    12/31/93                                         12/31/94

<S>          <C>         <C>         <C>           <C>           <C>         <C>        <C>          <C>          <C>       <C>
   5/1/93                              250.00      250.00        17.50       17.50      250.00       250.00       15.00     15.00
   6/1/93                              250.00      250.00        17.50       17.50      250.00       250.00       15.00     15.00
   7/1/93                              250.00      250.00        17.50       17.50      250.00       250.00       15.00     15.00
   8/1/93                              250.00      250.00        17.50       17.50      250.00       250.00       15.00     15.00
   9/1/93                              250.00      250.00        17.50       17.50      250.00       250.00       15.00     15.00
  10/1/93                              250.00      250.00        17.50       17.50      250.00       250.00       15.00     15.00
  11/1/93                              250.00      250.00        17.50       17.50      250.00       250.00       15.00     15.00
  12/1/93                              250.00      250.00        17.50       17.50      250.00       250.00       15.00     15.00
 12/31/93    121.8389    120.5367        0.00        0.00         0.00        0.00        0.00         0.00        0.00      0.00
   1/1/94                                                                               250.00       250.00       17.50     17.50
   2/1/94                                                                               250.00       250.00       17.50     17.50
   3/1/94                                                                               250.00       250.00       17.50     17.50
   4/1/94                                                                               250.00       250.00       17.50     17.50
   5/1/94                                                                               250.00       250.00       17.50     17.50
   6/1/94                                                                               250.00       250.00       17.50     17.50
   7/1/94                                                                               250.00       250.00       17.50     17.50
   8/1/94                                                                               250.00       250.00       17.50     17.50
   9/1/94                                                                               250.00       250.00       17.50     17.50
  10/1/94                                                                               250.00       250.00       17.50     17.50
  11/1/94                                                                               250.00       225.75       17.50     15.80
  12/1/94                                                                                27.12         0.00        1.90      0.00
 12/31/94     320.6695    323.6534                                                        0.00         0.00        0.00      0.00
   1/1/95
   2/1/95
   3/1/95
   4/1/95
   5/1/95
   6/1/95
   7/1/95
   8/1/95
   9/1/95
  10/1/95
  11/1/95
  12/1/95
 12/31/95    1873.899     2258.062 
   1/1/96
   2/1/96
   3/1/96
   4/1/96
   5/1/96
   6/1/96
   7/1/96
   8/1/96
   9/1/96
  10/1/96
  11/1/96
  12/1/96
 12/31/96    3629.012     4236.804 
   1/1/97
   2/1/97
   3/1/97
   4/1/97
   5/1/97
   6/1/97
   7/1/97
   8/1/97
   9/1/97
  10/1/97
  11/1/97
  12/1/97
 12/31/97    6125.903      9467.27

<CAPTION> 

amt subject to                                amt subject to                              amt subject to
 surr charge         surrender charge          surr charge         surrender charge        surr charge          surrender charge
   12/31/95                                      12/31/96                                    12/31/97
<S>            <C>         <C>         <C>    <C>            <C>          <C>       <C>   <C>             <C>        <C>       <C> 
   250.00      250.00      12.50       12.50     250.00      250.00       10.00     10.00    250.00       250.00     7.50      7.50
   250.00      250.00      12.50       12.50     250.00      250.00       10.00     10.00    250.00       250.00     7.50      7.50
   250.00      250.00      12.50       12.50     250.00      250.00       10.00     10.00    250.00       250.00     7.50      7.50
   250.00      250.00      12.50       12.50     250.00      250.00       10.00     10.00    250.00       250.00     7.50      7.50
   250.00      250.00      12.50       12.50     250.00      250.00       10.00     10.00    250.00       250.00     7.50      7.50
   250.00      250.00      12.50       12.50     250.00      250.00       10.00     10.00    250.00       250.00     7.50      7.50
   250.00      250.00      12.50       12.50     250.00      250.00       10.00     10.00    250.00       250.00     7.50      7.50
   250.00      250.00      12.50       12.50     250.00      250.00       10.00     10.00    250.00       250.00     7.50      7.50
     0.00        0.00       0.00        0.00       0.00        0.00        0.00      0.00      0.00         0.00     0.00      0.00
   250.00      250.00      15.00       15.00     250.00      250.00       12.50     12.50    250.00       250.00    10.00     10.00
   250.00      250.00      15.00       15.00     250.00      250.00       12.50     12.50    250.00       250.00    10.00     10.00
   250.00      250.00      15.00       15.00     250.00      250.00       12.50     12.50    250.00       250.00    10.00     10.00
   250.00      250.00      15.00       15.00     250.00      250.00       12.50     12.50    250.00       250.00    10.00     10.00
   250.00      250.00      15.00       15.00     250.00      250.00       12.50     12.50    250.00       250.00    10.00     10.00
   250.00      250.00      15.00       15.00     250.00      250.00       12.50     12.50    250.00       250.00    10.00     10.00
   250.00      250.00      15.00       15.00     250.00      250.00       12.50     12.50    250.00       250.00    10.00     10.00
   250.00      250.00      15.00       15.00     250.00      250.00       12.50     12.50    250.00       250.00    10.00     10.00
   250.00      250.00      15.00       15.00     250.00      250.00       12.50     12.50    250.00       250.00    10.00     10.00
   250.00      250.00      15.00       15.00     250.00      250.00       12.50     12.50    250.00       250.00    10.00     10.00
   250.00      250.00      15.00       15.00     250.00      250.00       12.50     12.50    250.00       250.00    10.00     10.00
   250.00      250.00      15.00       15.00     250.00      250.00       12.50     12.50    250.00       250.00    10.00     10.00
     0.00        0.00       0.00        0.00       0.00        0.00        0.00      0.00      0.00         0.00     0.00      0.00
   250.00      250.00      17.50       17.50     250.00      250.00       15.00     15.00    250.00       250.00    12.50     12.50
   250.00      250.00      17.50       17.50     250.00      250.00       15.00     15.00    250.00       250.00    12.50     12.50
   250.00      250.00      17.50       17.50     250.00      250.00       15.00     15.00    250.00       250.00    12.50     12.50
   250.00      250.00      17.50       17.50     250.00      250.00       15.00     15.00    250.00       250.00    12.50     12.50
   250.00      250.00      17.50       17.50     250.00      250.00       15.00     15.00    250.00       250.00    12.50     12.50
   250.00      250.00      17.50       17.50     250.00      250.00       15.00     15.00    250.00       250.00    12.50     12.50
   250.00      250.00      17.50       17.50     250.00      250.00       15.00     15.00    250.00       250.00    12.50     12.50
   250.00      250.00      17.50       17.50     250.00      250.00       15.00     15.00    250.00       250.00    12.50     12.50
   250.00      250.00      17.50       17.50     250.00      250.00       15.00     15.00    250.00       250.00    12.50     12.50
   250.00      250.00      17.50       17.50     250.00      250.00       15.00     15.00    250.00       250.00    12.50     12.50
   250.00      250.00      17.50       17.50     250.00      250.00       15.00     15.00    250.00       250.00    12.50     12.50
   250.00      250.00      17.50       17.50     250.00      250.00       15.00     15.00    250.00       250.00    12.50     12.50
     0.00        0.00       0.00        0.00       0.00        0.00        0.00      0.00      0.00         0.00     0.00      0.00
                                                 250.00      250.00       17.50     17.50    250.00       250.00    15.00     15.00
                                                 250.00      250.00       17.50     17.50    250.00       250.00    15.00     15.00
                                                 250.00      250.00       17.50     17.50    250.00       250.00    15.00     15.00
                                                 250.00      250.00       17.50     17.50    250.00       250.00    15.00     15.00
                                                 250.00      250.00       17.50     17.50    250.00       250.00    15.00     15.00
                                                 250.00      250.00       17.50     17.50    250.00       250.00    15.00     15.00
                                                 250.00      250.00       17.50     17.50    250.00       250.00    15.00     15.00
                                                 250.00      250.00       17.50     17.50    250.00       250.00    15.00     15.00
                                                 250.00      250.00       17.50     17.50    250.00       250.00    15.00     15.00
                                                 250.00      250.00       17.50     17.50    250.00       250.00    15.00     15.00
                                                 250.00      250.00       17.50     17.50    250.00       250.00    15.00     15.00
                                                 250.00      250.00       17.50     17.50    250.00       250.00    15.00     15.00
                                                   0.00        0.00        0.00      0.00      0.00         0.00     0.00      0.00
                                                                                             250.00       250.00    17.50     17.50
                                                                                             250.00       250.00    17.50     17.50
                                                                                             250.00       250.00    17.50     17.50
                                                                                             250.00       250.00    17.50     17.50
                                                                                             250.00       250.00    17.50     17.50
                                                                                             250.00       250.00    17.50     17.50
                                                                                             250.00       250.00    17.50     17.50
                                                                                             250.00       250.00    17.50     17.50
                                                                                             250.00       250.00    17.50     17.50
                                                                                             250.00       250.00    17.50     17.50
                                                                                             250.00       250.00    17.50     17.50
                                                                                             250.00       250.00    17.50     17.50
                                                                                               0.00         0.00     0.00      0.00

</TABLE> 
<PAGE>
 

                           HYPOTHETICAL PERFORMANCE
                            FOR A CONTRACT BASED ON
                 AVERAGE ANNUAL TOTAL RETURNS FOR Midcap FUND

<TABLE> 
<CAPTION> 

Period Ending:           12/31/97


1 year                      6.69%
since inception            12.10%

<S>              <C>         <C>         <C>                        <C>          <C>           <C>         <C> 
    4/30/93             1    1000           1000                    12/31/96     1.666295      1000           1000
    4/30/94       1.08639     -30        1056.39                    12/31/97     1.927771       -30        1126.92
    4/30/95       1.21964     -30        1155.96
    4/30/96      1.560217     -30        1448.76
    4/30/97      1.648549     -30        1500.78
   12/31/97      1.927771     -20        1734.97                                       free                 126.92
# of leap years                 1                                                      surr chg                 60
                             free         734.97                                       surr value          1066.92
                             surr chg         30
                             surr value  1704.97                                       return                6.69%
                                                       
                             return        12.10% 

    4/19/95      1.200515    1000           1000
    4/19/96      1.508137     -30        1226.24
    4/19/97      1.573861     -30        1249.68
   12/31/97      1.927771     -20        1510.69
# of leap years                 1
                             free         510.69
                             surr chg         50
                             surr value  1460.69
                                        
                             return       15.06%

</TABLE> 
<PAGE>
 

                           HYPOTHETICAL PERFORMANCE
                            FOR A CONTRACT BASED ON
            AVERAGE ANNUAL TOTAL RETURNS FOR GROWTH AND INCOME FUND


<TABLE> 
<CAPTION> 

Period Ending:               12/31/97


1 year                         22.62%
Since inception                16.30%
<S>              <C>         <C>             <C>                        <C>          <C>          <C>       <C> 
    4/30/93             1        1000           1000                    12/31/96     1.727747     1000         1000
    4/30/94       1.09127         -30        1061.27                    12/31/97     2.274012      -30      1286.17
    4/30/95      1.223586         -30        1159.95                                                             
    4/30/96      1.556439         -30        1445.49                                                             
    4/30/97      1.840502         -30        1679.30                                                             
   12/31/97      2.274012         -20        2054.85                                           free          286.17
# leap years                        1                                                          surr chg          60
                          free               1054.85                                           surr value   1226.17
                          surr chg                30                                                    
                          surr value         2024.85                                           return        22.62%

                          return              16.30%


    4/19/95      1.191883        1000           1000
    4/19/96      1.538067         -30        1260.45
    4/19/97      1.778994         -30        1427.89
   12/31/97      2.274012         -20        1805.21
# of leap years                     1
                          free                805.21
                          surr chg                50
                          surr value         1755.21

                          return              23.15%

</TABLE> 

                                    Page 1
<PAGE>
 
<TABLE> 
<CAPTION> 

SMALL CAP FUND

CALCULATION               $10,000 Single Payment


No Premium Tax    Contract                                                                            Surr Value     free withdrawal
                                  0                                                                                  AMOUNTS
                    Sm Cap   Paymts         Fee          UV's                                             Sm Cap        Sm Cap
      <S>        <C>         <C>            <C>      <C>                <C>         <C>         <C>    <C>           <C> 
        5/2/94   10,000.00    10000           0             1           1           0.07
      12/31/94    9,587.79        0           0      0.958779           1           0.07        7       8,969.14           1000
        5/2/95   10,156.63        0         -30      1.018663           2           0.06        0       9,604.76        958.779
      12/31/95   12,146.27        0           0      1.218215           2           0.06        7      11,528.77       2146.273
        5/2/96   13,697.76        0         -30      1.376831           3           0.05        0      13,197.76       3697.762
      12/31/96   15,616.69        0           0      1.569712           3           0.05        7      15,099.19       5616.689
        5/2/97   15,502.97        0         -30      1.561297           4           0.04        0      15,102.97        5502.97
      12/31/97   19,189.74        0           0       1.93259           4           0.04        7      18,772.24       9189.741

<CAPTION> 

PERCENT CHANGE                                                                                        Surr Value

                    Sm Cap                                                                                Sm Cap
      <S>           <C>                                                                                  <C> 
      12/31/94      -4.12%                                                                               -10.31%
        5/2/95       5.93%                                                                                -3.95%
      12/31/95      19.59%                                                                                28.54%
        5/2/96      12.77%                                                                                37.41%
      12/31/96      14.01%                                                                                30.97%
        5/2/97      -0.73%                                                                                14.44%
      12/31/97      23.78%                                                                                24.33%

</TABLE> 
<PAGE>
 
<TABLE> 
<CAPTION> 

CALCULATION                       $250 Payment per month

No Premium Tax


                                                       0
          Cumulative                                 Net
            Payments         Sm Cap   Paymts      Paymts        Fee           UV's
<S>       <C>              <C>        <C>         <C>           <C>       <C>                     <C>         <C> 
  5/2/94         250         250.00      250         250          0              1                1           0.07
  6/1/94         500         494.99      250         250          0        0.97997                1           0.07
  7/1/94         750         735.35      250         250          0       0.960883                1           0.07
  8/1/94       1,000         985.70      250         250          0       0.961335                1           0.07
  9/1/94       1,250       1,278.72      250         250          0       1.003292                1           0.07
 10/1/94       1,500       1,531.48      250         250          0       1.005457                1           0.07
 11/1/94       1,750       1,763.11      250         250          0         0.9934                1           0.07
 12/1/94       2,000       1,920.95      250         250          0       0.941472                1           0.07
12/31/94       2,000       1,956.26        0           0          0       0.958779                1           0.07
  1/1/95       2,250       2,206.26      250         250          0       0.958779                1           0.07
  2/1/95       2,500       2,458.94      250         250          0       0.959944                1           0.07
  3/1/95       2,750       2,789.99      250         250          0       0.991585                1           0.07
  4/1/95       3,000       3,100.50      250         250          0        1.01309                1           0.07
  5/1/95       3,250       3,361.33      250         250          0       1.016628                1           0.07
  5/2/95       3,250       3,338.06        0           0        -30       1.018663                2           0.06
  6/1/95       3,500       3,638.53      250         250          0       1.034066                2           0.06
  7/1/95       3,750       3,971.52      250         250          0       1.057652                2           0.06
  8/1/95       4,000       4,439.15      250         250          0       1.115608                2           0.06
  9/1/95       4,250       4,890.42      250         250          0        1.16619                2           0.06
 10/1/95       4,500       5,212.18      250         250          0       1.183302                2           0.06
 11/1/95       4,750       5,219.27      250         250          0       1.128154                2           0.06
 12/1/95       5,000       5,686.26      250         250          0       1.175057                2           0.06
12/31/95       5,000       5,895.10        0           0          0       1.218215                2           0.06
  1/1/96       5,250       6,145.10      250         250          0       1.218215                2           0.06
  2/1/96       5,500       6,441.35      250         250          0       1.227382                2           0.06
  3/1/96       5,750       6,981.66      250         250          0       1.282701                2           0.06
  4/1/96       6,000       7,392.47      250         250          0       1.312246                2           0.06
  5/1/96       6,250       8,049.73      250         250          0       1.384539                3           0.05
  5/2/96       6,250       7,974.92        0           0        -30       1.376831                3           0.05
  6/1/96       6,500       8,578.08      250         250          0       1.437802                3           0.05
  7/1/96       6,750       8,643.51      250         250          0       1.406866                3           0.05
  8/1/96       7,000       8,462.63      250         250          0       1.336733                3           0.05
  9/1/96       7,250       9,051.22      250         250          0       1.390216                3           0.05
 10/1/96       7,500       9,595.31      250         250          0       1.435387                3           0.05
 11/1/96       7,750       9,942.41      250         250          0       1.449913                3           0.05
 12/1/96       8,000      10,682.45      250         250          0       1.521376                3           0.05
12/31/96       8,000      11,021.85        0           0          0       1.569712                3           0.05
  1/1/97       8,250      11,271.85      250         250          0       1.569712                3           0.05
  2/1/97       8,500      11,719.92      250         250          0       1.597295                3           0.05
  3/1/97       8,750      11,802.82      250         250          0       1.574521                3           0.05
  4/1/97       9,000      11,718.11      250         250          0        1.52987                3           0.05
  5/1/97       9,250      12,020.16      250         250          0       1.536666                4           0.04
  5/2/97       9,250      12,182.83        0           0        -30       1.561297                4           0.04
  6/1/97       9,500      13,357.58      250         250          0       1.679809                4           0.04
  7/1/97       9,750      14,182.30      250         250          0       1.752084                4           0.04
  8/1/97      10,000      15,232.68      250         250          0       1.850963                4           0.04
  9/1/97      10,250      15,771.28      250         250          0       1.886031                4           0.04
 10/1/97      10,500      16,972.29      250         250          0        1.99976                4           0.04
 11/1/97      10,750      16,620.21      250         250          0        1.92882                4           0.04
 12/1/97      11,000      16,904.46      250         250          0       1.932794                4           0.04
12/31/97      11,000      16,902.67        0           0          0        1.93259                4           0.04

<CAPTION> 
             Surr Value
                          FREE       SURR
             Sm Cap      WTHDRL       CHG
   <S>     <C>          <C>         <C> 

   0
   1
   2
   3
   4
   5
   6
   7       1,803.57       25.00      135.19
   7
   8
   9
  10
  11
   0
   0
   1
   2
   3
   4
   5
   6
   7       5,547.60      895.10      330.00
   7
   8
   9
  10
  11
   0
   0
   1
   2
   3
   4
   5
   6
   7      10,514.35     3021.85      490.00
   7
   8
   9
  10
  11
   0
   0
   1
   2
   3
   4
   5
   6
   7      16,265.17     5902.67      620.00
</TABLE> 
<PAGE>
 
<TABLE> 
<CAPTION> 

amt subject to               amt subject to                  amt subject to                 amt subject to
 surr charge                  surr charge                     surr charge                    surr charge
  12/31/94       SURR          12/31/95          SURR          12/31/96         SURR           12/31/97           SURR
                  CHG                             CHG                            CHG                               CHG
<S>              <C>         <C>                 <C>         <C>                <C>         <C>                   <C> 
  250.00         17.50          250.00           15.00          250.00          12.50            250.00           10.00
  250.00         17.50          250.00           15.00          250.00          12.50            250.00           10.00
  250.00         17.50          250.00           15.00          250.00          12.50            250.00           10.00
  250.00         17.50          250.00           15.00          250.00          12.50            250.00           10.00
  250.00         17.50          250.00           15.00          250.00          12.50            250.00           10.00
  250.00         17.50          250.00           15.00          250.00          12.50            250.00           10.00
  250.00         17.50          250.00           15.00          250.00          12.50            250.00           10.00
  181.26         12.69          250.00           15.00          250.00          12.50            250.00           10.00
    0.00                          0.00            0.00            0.00           0.00              0.00            0.00
                                250.00           17.50          250.00          15.00            250.00           12.50
                                250.00           17.50          250.00          15.00            250.00           12.50
                                250.00           17.50          250.00          15.00            250.00           12.50
                                250.00           17.50          250.00          15.00            250.00           12.50
                                250.00           17.50          250.00          15.00            250.00           12.50
                                  0.00            0.00            0.00           0.00              0.00            0.00
                                250.00           17.50          250.00          15.00            250.00           12.50
                                250.00           17.50          250.00          15.00            250.00           12.50
                                250.00           17.50          250.00          15.00            250.00           12.50
                                250.00           17.50          250.00          15.00            250.00           12.50
                                250.00           17.50          250.00          15.00            250.00           12.50
                                250.00           17.50          250.00          15.00            250.00           12.50
                                250.00           17.50          250.00          15.00            250.00           12.50
                                  0.00            0.00            0.00           0.00              0.00            0.00
                                                                250.00          17.50            250.00           15.00
                                                                250.00          17.50            250.00           15.00
                                                                250.00          17.50            250.00           15.00
                                                                250.00          17.50            250.00           15.00
                                                                250.00          17.50            250.00           15.00
                                                                  0.00           0.00              0.00            0.00
                                                                250.00          17.50            250.00           15.00
                                                                250.00          17.50            250.00           15.00
                                                                250.00          17.50            250.00           15.00
                                                                250.00          17.50            250.00           15.00
                                                                250.00          17.50            250.00           15.00
                                                                250.00          17.50            250.00           15.00
                                                                250.00          17.50            250.00           15.00
                                                                  0.00           0.00              0.00            0.00
                                                                                                 250.00           17.50
                                                                                                 250.00           17.50
                                                                                                 250.00           17.50
                                                                                                 250.00           17.50
                                                                                                 250.00           17.50
                                                                                                   0.00            0.00
                                                                                                 250.00           17.50
                                                                                                 250.00           17.50
                                                                                                 250.00           17.50
                                                                                                 250.00           17.50
                                                                                                 250.00           17.50
                                                                                                 250.00           17.50
                                                                                                 250.00           17.50
                                                                                                   0.00            0.00

</TABLE> 
<PAGE>
 

                           HYPOTHETICAL PERFORMANCE
                            FOR A CONTRACT BASED ON
                  AVERAGE ANNUAL TOTAL RETURNS FOR SMALL CAP


<TABLE> 
<CAPTION> 

Period Ending:               12/31/97


1 year                         14.12%
since inception - fund         16.29%
                         
<S>             <C>             <C>      <C>        <C>        <C>          <C>          <C>       <C> 
   5/2/94              1         1000       1000               12/31/96     1.569712     1000         1000
   5/2/95       1.018663          -30     988.66               12/31/97      1.93259      -30      1201.17
   5/2/96       1.376831          -30    1306.28
   5/2/97       1.561297          -30    1451.30
 12/31/97        1.93259        -17.5    1778.93    1796.43
# LEAP YEARS                        1                                                free           201.17
                                                                                     surr chg           60
                            free          778.93                                     surr value    1141.17
                            surr chg          40
                            surr value   1738.93                                     return         14.12%
                             
                            return        16.29%
                                  
                                  
   4/19/95       1.00998         1000       1000
   4/19/96       1.34453          -30    1301.24
   4/19/97      1.517063          -30    1438.22
  12/31/97       1.93259          -20    1812.16   1832.16
# LEAP YEARS                        1

                            free          812.16
                            surr chg          50
                            surr value   1762.16

                            return        23.33%
</TABLE> 

                                    Page 1
<PAGE>
 
<TABLE> 
<CAPTION> 

CALCULATION              $10,000 Single Payment

No Premium Tax   Contract Value                                                              Surrender Value                        
                 -----------------------                                                     -------------------                    
                                                                                                                   free withdrawal
                                                                                                                        AMOUNTS 
                                              0 :Prem Tax                                                                           
                 Govt. Series                            Govt. Series                        Govt. Series          Govt. Series     
                           CV      Paymts     Fee         UV's                                                          
     <S>         <C>               <C>        <C>     <C>              <C>    <C>      <C>   <C>                   <C>              
      11/1/94       10,000.00      10,000       0       0.999962       1      0.07                                                  
     12/31/94       10,037.26           0       0       1.003688       1      0.07     2         9,399.65                  1000     
      11/1/95       11,135.21           0     -30       1.116479       2      0.06     0                                            
     12/31/95       11,354.32           0       0       1.138448       2      0.06     2        10,749.32              1354.322     
      11/1/96       11,483.04           0     -30       1.154362       3      0.05     0                                            
     12/31/96       11,536.13           0       0       1.159699       3      0.05     2        11,031.13              1536.131     
      11/1/97       12,193.08           0     -30       1.228756       4      0.04     0                                          
     12/31/97       12,308.94           0       0       1.240432       4      0.04     2        11,903.94              2308.939

<CAPTION> 
Percent Change   Contract Value               0 :Prem Tax                                    Surrender Value     
                 -----------------------                                                     -------------------
     <S>         <C>                          <C>                                            <C>               
                 Govt. Series                                                                Govt. Series     
     12/31/94           0.37%                                                                      -6.00%     
      11/1/95          10.94%                                                                                 
     12/31/95           1.97%                                                                      14.36%     
      11/1/96           1.13%                                                                                 
     12/31/96           0.46%                                                                       2.62%     
      11/1/97           5.69%                                                                                 
     12/31/97           0.95%                                                                       7.91%      
</TABLE> 
<PAGE>
 
<TABLE> 
<CAPTION> 

CALCULATION               $250 Per Month                    0 :Prem Tax

No Premium Tax

          Cumulative  Govt. Series                       Net                     Govt. Series
            Payments       CV                         Paymts        Fee                 UV's
<S>       <C>         <C>                    <C>      <C>           <C>          <C>                 <C>         <C>          <C> 
 11/1/94         250      250.00              250        250          0             0.999962          0           1           0.07
 12/1/94         500      499.46              250        250          0             0.997813          1           1           0.07
12/31/94         500      502.40                0          0          0             1.003688          2           1           0.07
  1/1/95         750      752.40              250        250          0             1.003688          2           1           0.07
  2/1/95       1,000    1,009.75              250        250          0             1.013489          3           1           0.07
  3/1/95       1,250    1,278.70              250        250          0             1.03251           4           1           0.07
  4/1/95       1,500    1,534.69              250        250          0             1.037348          5           1           0.07
  5/1/95       1,750    1,799.19              250        250          0             1.047149          6           1           0.07
  6/1/95       2,000    2,121.08              250        250          0             1.088986          7           1           0.07
  7/1/95       2,250    2,374.57              250        250          0             1.090778          8           1           0.07
  8/1/95       2,500    2,610.77              250        250          0             1.084442          9           1           0.07
  9/1/95       2,750    2,896.13              250        250          0             1.099128         10           1           0.07
 10/1/95       3,000    3,156.16              250        250          0             1.102934         11           1           0.07
 11/1/95       3,250    3,414.92              250        250        -30             1.116479          0           2           0.06
 12/1/95       3,500    3,694.47              250        250          0             1.126139          1           2           0.06
12/31/95       3,500    3,734.85                0          0          0             1.138448          2           2           0.06
  1/1/96       3,750    3,984.85              250        250          0             1.138448          2           2           0.06
  2/1/96       4,000    4,251.28              250        250          0             1.143143          3           2           0.06
  3/1/96       4,250    4,458.29              250        250          0             1.131584          4           2           0.06
  4/1/96       4,500    4,658.47              250        250          0             1.118937          5           2           0.06
  5/1/96       4,750    4,877.47              250        250          0             1.111491          6           2           0.06
  6/1/96       5,000    5,112.86              250        250          0             1.108163          7           2           0.06
  7/1/96       5,250    5,404.03              250        250          0             1.117086          8           2           0.06
  8/1/96       5,500    5,702.03              250        250          0             1.127008          9           2           0.06
  9/1/96       5,750    5,914.68              250        250          0             1.119625         10           2           0.06
 10/1/96       6,000    6,263.67              250        250          0             1.138364         11           2           0.06
 11/1/96       6,250    6,571.70              250        250        -30             1.154362          0           3           0.05
 12/1/96       6,500    6,913.32              250        250          0             1.170457          1           3           0.05
12/31/96       6,500    6,849.78                0          0          0             1.159699          2           3           0.05
  1/1/97       6,750    7,099.78              250        250          0             1.159699          2           3           0.05
  2/1/97       7,000    7,374.08              250        250          0             1.163668          3           3           0.05
  3/1/97       7,250    7,643.25              250        250          0             1.166693          4           3           0.05
  4/1/97       7,500    7,834.94              250        250          0             1.157792          5           3           0.05
  5/1/97       7,750    8,169.70              250        250          0             1.170318          6           3           0.05
  6/1/97       8,000    8,477.51              250        250          0             1.178599          7           3           0.05
  7/1/97       8,250    8,808.90              250        250          0             1.189914          8           3           0.05
  8/1/97       8,500    9,157.70              250        250          0             1.203261          9           3           0.05
  9/1/97       8,750    9,405.97              250        250          0             1.203033         10           3           0.05
 10/1/97       9,000    9,785.15              250        250          0             1.219556         11           3           0.05
 11/1/97       9,250   10,078.97              250        250        -30             1.228756          0           4           0.04
 12/1/97       9,500   10,351.74              250        250          0             1.231532          1           4           0.04
12/31/97       9,500   10,426.55                0          0          0             1.240432          2           4           0.04
            
<CAPTION>         
                                               amt subject to      amt subject to          amt subject to         amt subject to
                                                surr charge         surr charge             surr charge            surr charge
      Govt. Series       FREE       SURR         12/31/94    SURR    12/31/95       SURR     12/31/96      SURR     12/31/97   SURR
               CSV      WTHDRL       CHG                     CHG                    CHG                    CHG                 CHG
<S>   <C>               <C>        <C>     <C>              <C>    <C>              <C>    <C>             <C>   <C>           <C> 
   0                                               250.00   17.50    250.00         15.00     250.00       12.50     250.00    10.00
   1                                               227.40   15.92    250.00         15.00     250.00       12.50     250.00    10.00
   2        463.99      25.00      33.42             0.00    0.00      0.00          0.00       0.00        0.00       0.00     0.00
   2                                                                 250.00         17.50     250.00       15.00     250.00    12.50
   3                                                                 250.00         17.50     250.00       15.00     250.00    12.50
   4                                                                 250.00         17.50     250.00       15.00     250.00    12.50
   5                                                                 250.00         17.50     250.00       15.00     250.00    12.50
   6                                                                 250.00         17.50     250.00       15.00     250.00    12.50
   7                                                                 250.00         17.50     250.00       15.00     250.00    12.50
   8                                                                 250.00         17.50     250.00       15.00     250.00    12.50
   9                                                                 250.00         17.50     250.00       15.00     250.00    12.50
  10                                                                 250.00         17.50     250.00       15.00     250.00    12.50
  11                                                                 250.00         17.50     250.00       15.00     250.00    12.50
   0                                                                 250.00         17.50     250.00       15.00     250.00    12.50
   1                                                                 143.36         10.03     250.00       15.00     250.00    12.50
   2      3,497.31     341.49     232.53                               0.00          0.00       0.00        0.00       0.00     0.00
   2                                                                                          250.00       17.50     250.00    15.00
   3                                                                                          250.00       17.50     250.00    15.00
   4                                                                                          250.00       17.50     250.00    15.00
   5                                                                                          250.00       17.50     250.00    15.00
   6                                                                                          250.00       17.50     250.00    15.00
   7                                                                                          250.00       17.50     250.00    15.00
   8                                                                                          250.00       17.50     250.00    15.00
   9                                                                                          250.00       17.50     250.00    15.00
  10                                                                                          250.00       17.50     250.00    15.00
  11                                                                                          250.00       17.50     250.00    15.00
   0                                                                                          192.61       13.48     250.00    15.00
   1                                                                                            0.00        0.00     250.00    15.00
   2      6,451.30     657.17     393.48                                                        0.00        0.00       0.00     0.00
   2                                                                                                                 250.00    17.50
   3                                                                                                                 250.00    17.50
   4                                                                                                                 250.00    17.50
   5                                                                                                                 250.00    17.50
   6                                                                                                                 250.00    17.50
   7                                                                                                                 250.00    17.50
   8                                                                                                                 250.00    17.50
   9                                                                                                                 250.00    17.50
  10                                                                                                                 250.00    17.50
  11                                                                                                                 250.00    17.50
   0                                                                                                                 250.00    17.50
   1                                                                                                                 168.65    11.81
   2      9,867.25    1007.90     554.31                                                                               0.00     0.00
</TABLE> 
<PAGE>
 

                            HYPOTHETICAL PERFORMANCE
                             FOR A CONTRACT BASED ON
              AVERAGE ANNUAL TOTAL RETURNS FOR U.S. GOVERNMENT FUND

<TABLE> 
<CAPTION> 
Period Ending:          12/31/97
1 Year                    -1.65%
since inception - fund     3.04%

<S>            <C>      <C>            <C>         <C>          <C>               <C>           <C>             <C> 
  10/31/94            1     1000          1000                  12/31/96          1.159699      1000                1000
  10/31/95     1.113534      -30       1083.53                  12/31/97          1.240432       -30             1039.62
  10/31/96     1.154407      -30       1093.31                                                                    103.96
  10/31/97     1.228756      -30       1133.72                                                                     56.14
  12/31/97     1.240432       -5       1139.49                                                                    983.48

# leap yrs            1                 139.49                                                                    -1.65%
                                            40
                                       1099.49

                                         3.04%


   4/19/95     1.046628     1000          1000
   4/19/96     1.114057      -30       1034.42
   4/19/97     1.163436      -30       1050.27
  12/31/97     1.240432      -20       1099.78      1119.78
# LEAP YEARS                   1

                       free             105.03
                       surr chg        49.7377
                       surr value      1050.04

                       return            1.82%
</TABLE> 

                                    Page 1
<PAGE>
 
<TABLE> 
<CAPTION> 

CALCULATION                $10,000 Single Payment


No Premium Tax   Contract Value                                                               Surrender Value      
                 -------------------                                                          ----------------------
                                                                                                                     free withdrawal
                                                                                                                     AMOUNTS
                                         0 :Prem Tax
                  Balanced                             Balanced                                    Balanced          Balanced
                        CV           Paymts     Fee      UV's
    <S>          <C>                 <C>        <C>    <C>            <C>    <C>       <C>         <C>              <C> 
     11/1/94     10,000.00           10,000       0    0.999962       1      0.07
    12/31/94      9,967.47                0       0    0.996709       1      0.07      2            9,334.75             1000
     11/1/95     11,763.77                0     -30    1.179332       2      0.06      0
    12/31/95     12,234.95                0       0    1.226569       2      0.06      2           11,629.95         2234.954
     11/1/96     13,444.52                0     -30    1.350837       3      0.05      0
    12/31/96     14,072.64                0       0    1.413947       3      0.05      2           13,567.64         4072.638
     11/1/97     15,691.08                0     -30    1.579574       4      0.04      0
    12/31/97     16,091.52                0       0    1.619885       4      0.04      2           15,686.52         6091.518

<CAPTION> 

Percent Change   Contract Value           0 :Prem Tax                                         Surrender Value      
                 -------------------                                                          ----------------------

                  Balanced                                                                      Govt. Series
    <S>           <C>                     <C>                                                   <C> 
    12/31/94        -0.33%                                                                            -6.65%
     11/1/95        18.02% 
    12/31/95         4.01%                                                                            24.59%
     11/1/96         9.89% 
    12/31/96         4.67%                                                                            16.66%
     11/1/97        11.50% 
    12/31/97         2.55%                                                                            15.62%
</TABLE> 
<PAGE>
 
<TABLE> 
<CAPTION> 

CALCULATION                 $250 Per Month                0 :Prem Tax

No Premium Tax

                                                                                                                                 
          Cumulative Balanced                        Net                            Balanced                    
          Payments           CV                   Paymts            Fee                 UV's                            
<S>       <C>         <C>                 <C>    <C>                <C>             <C>               <C>          <C>       <C> 
  11/1/94     250        250.00           250        250              0             0.999962           0            1        0.07
  12/1/94     500        496.22           250        250              0             0.984828           1            1        0.07
 12/31/94     500        502.20             0          0              0             0.996709           2            1        0.07
   1/1/95     750        752.20           250        250              0             0.996709           2            1        0.07
   2/1/95   1,000      1,011.83           250        250              0              1.00947           3            1        0.07
   3/1/95   1,250      1,292.83           250        250              0             1.040399           4            1        0.07
   4/1/95   1,500      1,568.67           250        250              0             1.061187           5            1        0.07
   5/1/95   1,750      1,855.16           250        250              0             1.085877           6            1        0.07
   6/1/95   2,000      2,171.09           250        250              0             1.124463           7            1        0.07
   7/1/95   2,250      2,462.90           250        250              0             1.146118           8            1        0.07
   8/1/95   2,500      2,731.25           250        250              0             1.154658           9            1        0.07
   9/1/95   2,750      3,013.25           250        250              0             1.168188          10            1        0.07
  10/1/95   3,000      3,308.65           250        250              0             1.185789          11            1        0.07
  11/1/95   3,250      3,510.64           250        250            -30             1.179332           0            2        0.06
  12/1/95   3,500      3,850.90           250        250              0             1.209653           1            2        0.06
 12/31/95   3,500      3,904.75             0          0              0             1.226569           2            2        0.06
   1/1/96   3,750      4,154.75           250        250              0             1.226569           2            2        0.06
   2/1/96   4,000      4,486.14           250        250              0             1.250599           3            2        0.06
   3/1/96   4,250      4,775.23           250        250              0             1.261495           4            2        0.06
   4/1/96   4,500      5,027.31           250        250              0             1.262044           5            2        0.06
   5/1/96   4,750      5,255.24           250        250              0             1.256505           6            2        0.06
   6/1/96   5,000      5,546.15           250        250              0             1.266285           7            2        0.06
   7/1/96   5,250      5,843.13           250        250              0             1.277011           8            2        0.06
   8/1/96   5,500      5,993.01           250        250              0              1.25513           9            2        0.06
   9/1/96   5,750      6,275.18           250        250              0             1.261869          10            2        0.06
  10/1/96   6,000      6,793.15           250        250              0             1.315753          11            2        0.06
  11/1/96   6,250      7,194.28           250        250            -30             1.350837           0            3        0.05
  12/1/96   6,500      7,831.93           250        250              0             1.423624           1            3        0.05
 12/31/96   6,500      7,778.69             0          0              0             1.413947           2            3        0.05
   1/1/97   6,750      8,028.69           250        250              0             1.413947           2            3        0.05
   2/1/97   7,000      8,399.36           250        250              0             1.435197           3            3        0.05
   3/1/97   7,250      8,701.28           250        250              0             1.444069           4            3        0.05
   4/1/97   7,500      8,689.96           250        250              0             1.400701           5            3        0.05
   5/1/97   7,750      9,052.40           250        250              0             1.418825           6            3        0.05
   6/1/97   8,000      9,623.34           250        250              0             1.469127           7            3        0.05
   7/1/97   8,250     10,268.82           250        250              0             1.529501           8            3        0.05
   8/1/97   8,500     10,982.98           250        250              0             1.598636           9            3        0.05
   9/1/97   8,750     10,985.32           250        250              0             1.562588          10            3        0.05
  10/1/97   9,000     11,615.91           250        250              0             1.616724          11            3        0.05
  11/1/97   9,250     11,568.99           250        250            -30             1.579574           0            4        0.04
  12/1/97   9,500     12,101.36           250        250              0             1.618128           1            4        0.04
 12/31/97   9,500     12,114.50             0          0              0             1.619885           2            4        0.04

<CAPTION> 

                                        amt subject to         amt subject to           amt subject to          amt subject to 
                                          surr charge            surr charge              surr charge            surr charge 
     Balanced           FREE      SURR      12/31/94     SURR      12/31/95       SURR     12/31/96      SURR      12/31/97    SURR
               CSV     WTHDRL     CHG                     CHG                      CHG                    CHG                   CHG
  <S>       <C>        <C>       <C>    <C>             <C>       <C>            <C>        <C>         <C>     <C>           <C> 
   0                                         250.00     17.50      250.00        15.00      250.00      12.50      250.00     10.00 
   1                                         227.20     15.90      250.00        15.00      250.00      12.50      250.00     10.00 
   2        463.80     25.00     33.40         0.00      0.00        0.00         0.00        0.00       0.00        0.00      0.00 
   2                                                               250.00        17.50      250.00      15.00      250.00     12.50 
   3                                                               250.00        17.50      250.00      15.00      250.00     12.50 
   4                                                               250.00        17.50      250.00      15.00      250.00     12.50 
   5                                                               250.00        17.50      250.00      15.00      250.00     12.50 
   6                                                               250.00        17.50      250.00      15.00      250.00     12.50 
   7                                                               250.00        17.50      250.00      15.00      250.00     12.50 
   8                                                               250.00        17.50      250.00      15.00      250.00     12.50 
   9                                                               250.00        17.50      250.00      15.00      250.00     12.50 
  10                                                               250.00        17.50      250.00      15.00      250.00     12.50 
  11                                                               250.00        17.50      250.00      15.00      250.00     12.50 
   0                                                               250.00        17.50      250.00      15.00      250.00     12.50 
   1                                                               250.00        17.50      250.00      15.00      250.00     12.50 
   2      3,659.75    351.06    240.00                               0.00         0.00        0.00       0.00        0.00      0.00 
   2                                                                                        250.00      17.50      250.00     15.00 
   3                                                                                        250.00      17.50      250.00     15.00 
   4                                                                                        250.00      17.50      250.00     15.00 
   5                                                                                        250.00      17.50      250.00     15.00 
   6                                                                                        250.00      17.50      250.00     15.00 
   7                                                                                        250.00      17.50      250.00     15.00 
   8                                                                                        250.00      17.50      250.00     15.00 
   9                                                                                        250.00      17.50      250.00     15.00 
  10                                                                                        250.00      17.50      250.00     15.00 
  11                                                                                        250.00      17.50      250.00     15.00 
   0                                                                                        250.00      17.50      250.00     15.00 
   1                                                                                        250.00      17.50      250.00     15.00 
   2      7,358.69    719.43    415.00                                                        0.00       0.00        0.00      0.00 
   2                                                                                                               250.00     17.50 
   3                                                                                                               250.00     17.50 
   4                                                                                                               250.00     17.50 
   5                                                                                                               250.00     17.50 
   6                                                                                                               250.00     17.50 
   7                                                                                                               250.00     17.50 
   8                                                                                                               250.00     17.50 
   9                                                                                                               250.00     17.50 
  10                                                                                                               250.00     17.50 
  11                                                                                                               250.00     17.50 
   0                                                                                                               250.00     17.50 
   1                                                                                                               250.00     17.50 
   2     11,549.50   2068.99    560.00                                                                               0.00      0.00 
</TABLE> 
<PAGE>
 

                            HYPOTHETICAL PERFORMANCE
                             FOR A CONTRACT BASED ON
                 AVERAGE ANNUAL TOTAL RETURNS FOR BALANCED FUND

<TABLE> 
<CAPTION> 
Period Ending:           12/31/97
1 Year                      5.57%
since inception - fund     12.86%

<S>              <C>         <C>         <C>          <C>           <C>          <C>       <C>       <C> 
   10/31/94             1    1000           1000                    12/31/96     1.413947  1000         1000
   10/31/95      1.178386     -30        1148.39                    12/31/97     1.619885   -30      1115.65
   10/31/96      1.352925     -30        1288.48                                                      115.65
   10/31/97      1.579574     -30        1474.33                                                          60
   12/31/97      1.619885      -5        1506.96                                                     1055.65
                            
                                          506.96                                                       5.57%
                                              40
                                         1466.96
                            
                                           12.86%
                            
                            
    4/19/95      1.073395    1000           1000
    4/19/96      1.245841     -30        1130.65
    4/19/97      1.391474     -30        1232.82
   12/31/97      1.619885     -20        1415.19      1435.19
# LEAP YEARS                    1
                            
                         free             415.19
                         surr chg             50
                         surr value      1365.19
                         
                         return           12.21%
</TABLE> 

                                    Page 1
<PAGE>
 
CALCULATION                     $10,000 Single Payment

<TABLE> 
<CAPTION> 

No Premium Tax    Contract Value                                                               Surrender Value
                  -----------------                                                            -----------------------
                                                                                                                  free withdrawal
                                                                                                                  AMOUNTS
                                        0 :Prem Tax                                      
                Equity Growth                    Equity Growth                              Equity Growth         Equity Growth
                        CV         Paymts    Fee      UV's                                
         <S>        <C>            <C>     <C>     <C>           <C>    <C>      <C>         <C>                    <C> 
          11/1/94   10,000.00      10,000      0   0.985962      1      0.07             
         12/31/94    9,694.22           0      0   0.955813      1      0.07     2               9,080.62                  1000
          11/1/95   14,452.15           0    -30   1.427885      2      0.06     0       
         12/31/95   14,185.73           0      0   1.401562      2      0.06     2              13,580.73              4185.726
          11/1/96   15,361.50           0    -30   1.520694      3      0.05     0       
         12/31/96   15,798.74           0      0   1.563978      3      0.05     2              15,293.74              5798.744
          11/1/97   19,270.11           0    -30   1.910592      4      0.04     0       
         12/31/97   19,541.56           0      0   1.937505      4      0.04     2              19,136.56              9541.557

<CAPTION>                                                                                          
                                                                                         
Percent Change    Contract Value        0 :Prem Tax                                            Surrender Value
                  -----------------                                                            -----------------------
                                                                                         
                 Equity Growth                                                              Equity Growth
         <S>           <C>                                                                  <C>  
         12/31/94      -3.06%                                                                      -9.19%
          11/1/95      49.08%                                                            
         12/31/95      -1.84%                                                                      49.56%
          11/1/96       8.29%                                                            
         12/31/96       2.85%                                                                      12.61%
          11/1/97      21.97%                                                            
         12/31/97       1.41%                                                                      25.13%
</TABLE> 


<PAGE>
 
<TABLE> 
<CAPTION> 

CALCULATION              $250 Per Month                          0 :Prem Tax

No Premium Tax           

       Cumulative Equity Growth                               Net           Equity Growth                                         
         Payments            CV                            Paymts        Fee         UV's                                         
<S>         <C>        <C>                         <C>     <C>           <C>    <C>                     <C>         <C>       <C>   
  11/1/94     250        250.00                    250        250          0     0.985962                0           1        0.07
  12/1/94     500        487.30                    250        250          0     0.935885                1           1        0.07
 12/31/94     500        497.68                      0          0          0     0.955813                2           1        0.07
   1/1/95     750        747.68                    250        250          0     0.955813                2           1        0.07
   2/1/95   1,000      1,009.23                    250        250          0     0.970579                3           1        0.07
   3/1/95   1,250      1,311.04                    250        250          0     1.020409                4           1        0.07
   4/1/95   1,500      1,637.63                    250        250          0     1.080016                5           1        0.07
   5/1/95   1,750      1,964.15                    250        250          0     1.130482                6           1        0.07
   6/1/95   2,000      2,292.98                    250        250          0     1.175856                7           1        0.07
   7/1/95   2,250      2,701.14                    250        250          0      1.25696                8           1        0.07
   8/1/95   2,500      3,182.25                    250        250          0     1.364507                9           1        0.07
   9/1/95   2,750      3,532.42                    250        250          0     1.407456               10           1        0.07
  10/1/95   3,000      3,915.22                    250        250          0     1.460369               11           1        0.07
  11/1/95   3,250      4,048.13                    250        250        -30     1.427885                0           2        0.06
  12/1/95   3,500      4,245.89                    250        250          0     1.409459                1           2        0.06
 12/31/95   3,500      4,222.10                      0          0          0     1.401562                2           2        0.06
   1/1/96   3,750      4,472.10                    250        250          0     1.401562                2           2        0.06
   2/1/96   4,000      4,871.74                    250        250          0     1.448458                3           2        0.06
   3/1/96   4,250      5,143.60                    250        250          0     1.454958                4           2        0.06
   4/1/96   4,500      5,419.72                    250        250          0     1.462346                5           2        0.06
   5/1/96   4,750      5,809.70                    250        250          0     1.500116                6           2        0.06
   6/1/96   5,000      6,072.58                    250        250          0     1.503442                7           2        0.06
   7/1/96   5,250      6,237.92                    250        250          0     1.482481                8           2        0.06
   8/1/96   5,500      6,102.98                    250        250          0     1.390998                9           2        0.06
   9/1/96   5,750      6,474.30                    250        250          0      1.41865               10           2        0.06
  10/1/96   6,000      7,147.78                    250        250          0     1.511442               11           2        0.06
  11/1/96   6,250      7,411.53                    250        250        -30     1.520694                0           3        0.05
  12/1/96   6,500      8,118.16                    250        250          0     1.614385                1           3        0.05
 12/31/96   6,500      7,864.68                      0          0          0     1.563978                2           3        0.05
   1/1/97   6,750      8,114.68                    250        250          0     1.563978                2           3        0.05
   2/1/97   7,000      8,942.90                    250        250          0     1.675421                3           3        0.05
   3/1/97   7,250      8,878.56                    250        250          0     1.616529                4           3        0.05
   4/1/97   7,500      8,837.42                    250        250          0     1.563522                5           3        0.05
   5/1/97   7,750      9,393.55                    250        250          0     1.617682                6           3        0.05
   6/1/97   8,000     10,218.51                    250        250          0     1.716698                7           3        0.05
   7/1/97   8,250     11,114.64                    250        250          0     1.825246                8           3        0.05
   8/1/97   8,500     12,374.57                    250        250          0     1.991097                9           3        0.05
   9/1/97   8,750     12,165.38                    250        250          0     1.917212               10           3        0.05
  10/1/97   9,000     13,063.14                    250        250          0     2.019297               11           3        0.05
  11/1/97   9,250     12,579.91                    250        250        -30     1.910592                0           4        0.04
  12/1/97   9,500     13,311.86                    250        250          0     1.983789                1           4        0.04
 12/31/97   9,500     13,001.28                      0          0          0     1.937505                2           4        0.04

<CAPTION> 
                                            amt subject to         amt subject to         amt subject to       amt subject to   
                                             surr charge             surr charge            surr charge         surr charge   
      Equity Growth     FREE        SURR      12/31/94     SURR       12/31/95      SURR     12/31/96     SURR    12/31/97    SURR  
                CSV   WTHDRL        CHG                    CHG                      CHG                   CHG                 CHG   
  <S>   <C>           <C>           <C>     <C>            <C>     <C>              <C>    <C>            <C>   <C>           <C> 
   0                                          250.00       17.50       250.00       15.00      250.00     12.50    250.00     10.00 
   1                                          222.68       15.59       250.00       15.00      250.00     12.50    250.00     10.00 
   2        459.59       25.00       33.09      0.00        0.00         0.00        0.00        0.00      0.00      0.00      0.00 
   2                                                                   250.00       17.50      250.00     15.00    250.00     12.50 
   3                                                                   250.00       17.50      250.00     15.00    250.00     12.50 
   4                                                                   250.00       17.50      250.00     15.00    250.00     12.50 
   5                                                                   250.00       17.50      250.00     15.00    250.00     12.50 
   6                                                                   250.00       17.50      250.00     15.00    250.00     12.50 
   7                                                                   250.00       17.50      250.00     15.00    250.00     12.50 
   8                                                                   250.00       17.50      250.00     15.00    250.00     12.50 
   9                                                                   250.00       17.50      250.00     15.00    250.00     12.50 
  10                                                                   250.00       17.50      250.00     15.00    250.00     12.50 
  11                                                                   250.00       17.50      250.00     15.00    250.00     12.50 
   0                                                                   250.00       17.50      250.00     15.00    250.00     12.50 
   1                                                                   250.00       17.50      250.00     15.00    250.00     12.50 
   2      3,977.10      722.10      240.00                               0.00        0.00        0.00      0.00      0.00      0.00 
   2                                                                                           250.00     17.50    250.00     15.00 
   3                                                                                           250.00     17.50    250.00     15.00 
   4                                                                                           250.00     17.50    250.00     15.00 
   5                                                                                           250.00     17.50    250.00     15.00 
   6                                                                                           250.00     17.50    250.00     15.00 
   7                                                                                           250.00     17.50    250.00     15.00 
   8                                                                                           250.00     17.50    250.00     15.00 
   9                                                                                           250.00     17.50    250.00     15.00 
  10                                                                                           250.00     17.50    250.00     15.00 
  11                                                                                           250.00     17.50    250.00     15.00 
   0                                                                                           250.00     17.50    250.00     15.00 
   1                                                                                           250.00     17.50    250.00     15.00 
   2      7,444.68     1364.68      415.00                                                       0.00      0.00      0.00      0.00 
   2                                                                                                               250.00     17.50 
   3                                                                                                               250.00     17.50 
   4                                                                                                               250.00     17.50 
   5                                                                                                               250.00     17.50 
   6                                                                                                               250.00     17.50 
   7                                                                                                               250.00     17.50 
   8                                                                                                               250.00     17.50 
   9                                                                                                               250.00     17.50 
  10                                                                                                               250.00     17.50 
  11                                                                                                               250.00     17.50 
   0                                                                                                               250.00     17.50 
   1                                                                                                               250.00     17.50 
   2     12,436.28     3501.28      560.00                                                                           0.00      0.00 
</TABLE> 

<PAGE>
 



                           HYPOTHETICAL PERFORMANCE
                            FOR A CONTRACT BASED ON
              AVERAGE ANNUAL TOTAL RETURNS FOR EQUITY GROWTH FUND

<TABLE> 
<CAPTION> 

Period Ending:            12/31/97
1 Year                      14.88%
since inception - fund      20.04%

<S>              <C>          <C>         <C>          <C>           <C>          <C>          <C>      <C> 
   10/31/94             1     1000           1000                    12/31/96     1.563978     1000        1000
   10/31/95      1.429916      -30        1399.92                    12/31/97     1.937505      -30     1208.83
   10/31/96      1.519748      -30        1457.86                                                        208.83
   10/31/97      1.910592      -30        1802.79                                                            60
   12/31/97      1.937505       -5        1823.19                                                       1148.83
                             
                                           823.19                                                        14.88%
                                               40
                                          1783.19
                             
                                           20.04%
                             
                             
    4/19/95      1.091176     1000           1000
    4/19/96      1.434011      -30        1284.19
    4/19/97      1.561505      -30        1368.36
   12/31/97      1.937505      -20        1677.85      1697.85
# LEAP YEARS                     1
                             
                          free             677.85
                          surr chg             50
                          surr value      1627.85
                          
                          return           19.77%

</TABLE> 

                                    Page 1
<PAGE>
 
<TABLE> 
<CAPTION> 

CALCULATION                     $10,000 Single Payment


No Premium Tax     Contract Value                                                               Surrender Value
                   ----------------------                                                       ----------------------------
                                                                                                                     free withdrawal
                                                                                                                     AMOUNTS
                                          0 :Prem Tax
      International Equity                     International Equity                      International Equity
                        CV        Paymts     Fee       UV's
   <S>           <C>              <C>        <C>      <C>              <C>  <C>     <C>             <C>              <C> 
    11/1/94      10,000.00        10,000       0      0.999962         1    0.07                                     
   12/31/94      10,237.00             0       0      1.023661         1    0.07    2                9,585.76            1000
    11/1/95      10,087.54             0     -30      1.011716         2    0.06    0                                
   12/31/95      10,692.43             0       0      1.072382         2    0.06    2               10,106.71        1008.754
    11/1/96      11,008.67             0     -30      1.107108         3    0.05    0                                
   12/31/96      11,215.69             0       0      1.127927         3    0.05    2               10,710.94        1215.689
    11/1/97      11,123.61             0     -30      1.121684         4    0.04    0                                
   12/31/97      10,886.69             0       0      1.097793         4    0.04    2               10,490.91        1112.361
                       
<CAPTION> 

Percent Change     Contract Value               0 :Prem Tax
                   ----------------------                                                       

      International Equity
   <S>              <C> 
   12/31/94          2.37%
    11/1/95         -1.46%
   12/31/95          6.00%
    11/1/96          2.96%
   12/31/96          1.88%
    11/1/97         -0.82%
   12/31/97         -2.13%

</TABLE> 
<PAGE>
 
<TABLE> 
<CAPTION> 

CALCULATION                        $250 Per Month                          0 :Prem Tax

No Premium Tax                                                                                                                     
                                                                                                                                   
          Cumulative International Equity               Net               International Equity                                     
            Payments               CV                Paymts           Fee                 UV's                                     
<S>         <C>              <C>             <C>     <C>              <C>  <C>                                <C>      <C>    <C> 
 11/1/94         250           250.00        250        250             0             0.999962                0        1      0.07 
 12/1/94         500           500.46        250        250             0             1.001808                1        1      0.07 
12/31/94         500           511.38          0          0             0             1.023661                2        1      0.07 
  1/1/95         750           761.38        250        250             0             1.023661                2        1      0.07 
  2/1/95       1,000           983.65        250        250             0             0.986386                3        1      0.07 
  3/1/95       1,250         1,223.64        250        250             0             0.976341                4        1      0.07 
  4/1/95       1,500         1,512.22        250        250             0              1.00713                5        1      0.07 
  5/1/95       1,750         1,811.28        250        250             0             1.039798                6        1      0.07 
  6/1/95       2,000         2,062.59        250        250             0             1.040552                7        1      0.07 
  7/1/95       2,250         2,278.78        250        250             0             1.023495                8        1      0.07 
  8/1/95       2,500         2,649.74        250        250             0             1.077822                9        1      0.07 
  9/1/95       2,750         2,821.04        250        250             0              1.04581               10        1      0.07 
 10/1/95       3,000         3,086.70        250        250             0             1.051618               11        1      0.07 
 11/1/95       3,250         3,189.58        250        250           -30             1.011716                0        2      0.06 
 12/1/95       3,500         3,544.92        250        250             0             1.045128                1        2      0.06 
12/31/95       3,500         3,637.36          0          0             0             1.072382                2        2      0.06 
  1/1/96       3,750         3,887.36        250        250             0             1.072382                2        2      0.06 
  2/1/96       4,000         4,128.68        250        250             0             1.069988                3        2      0.06 
  3/1/96       4,250         4,385.61        250        250             0             1.071782                4        2      0.06 
  4/1/96       4,500         4,728.01        250        250             0             1.094364                5        2      0.06 
  5/1/96       4,750         5,088.39        250        250             0             1.119914                6        2      0.06 
  6/1/96       5,000         5,359.58        250        250             0             1.124577                7        2      0.06 
  7/1/96       5,250         5,659.86        250        250             0             1.135127                8        2      0.06 
  8/1/96       5,500         5,760.07        250        250             0             1.105085                9        2      0.06 
  9/1/96       5,750         6,024.27        250        250             0              1.10781               10        2      0.06 
 10/1/96       6,000         6,336.66        250        250             0             1.119282               11        2      0.06 
 11/1/96       6,250         6,487.73        250        250           -30             1.107108                0        3      0.05 
 12/1/96       6,500         6,875.05        250        250             0              1.13054                1        3      0.05 
12/31/96       6,500         6,859.16          0          0             0             1.127927                2        3      0.05 
  1/1/97       6,750         7,109.16        250        250             0             1.127927                2        3      0.05 
  2/1/97       7,000         7,011.06        250        250             0             1.072699                3        3      0.05 
  3/1/97       7,250         7,357.78        250        250             0             1.087497                4        3      0.05 
  4/1/97       7,500         7,531.39        250        250             0             1.076206                5        3      0.05 
  5/1/97       7,750         7,918.87        250        250             0             1.095851                6        3      0.05 
  6/1/97       8,000         8,612.29        250        250             0             1.157214                7        3      0.05 
  7/1/97       8,250         9,279.99        250        250             0              1.21334                8        3      0.05 
  8/1/97       8,500         9,648.59        250        250             0             1.228846                9        3      0.05 
  9/1/97       8,750         9,234.21        250        250             0             1.144231               10        3      0.05 
 10/1/97       9,000         9,920.09        250        250             0             1.198242               11        3      0.05 
 11/1/97       9,250         9,506.28        250        250           -30             1.121684                0        4      0.04 
 12/1/97       9,500         9,694.76        250        250             0             1.114425                1        4      0.04 
12/31/97       9,500         9,550.07          0          0             0             1.097793                2        4      0.04 

<CAPTION> 

                                            amt subject to       amt subject to         amt subject to          amt subject to  
                                              surr charge          surr charge            surr charge             surr charge       
  International Equity     FREE     SURR       12/31/94    SURR     12/31/95      SURR     12/31/96       SURR    12/31/97     SURR
                  CSV     WTHDRL     CHG                    CHG                    CHG                     CHG                  CHG
  <C>         <C>         <C>       <C>     <C>           <C>    <C>             <C>    <C>              <C>    <C>           <C> 
  0                                             250.00    17.50       250.00     15.00      250.00       12.50      250.00    10.00
  1                                             236.38    16.55       250.00     15.00      250.00       12.50      250.00    10.00
  2            472.33      25.00    34.05         0.00     0.00         0.00      0.00        0.00        0.00        0.00     0.00
  2                                                                   250.00     17.50      250.00       15.00      250.00    12.50
  3                                                                   250.00     17.50      250.00       15.00      250.00    12.50
  4                                                                   250.00     17.50      250.00       15.00      250.00    12.50
  5                                                                   250.00     17.50      250.00       15.00      250.00    12.50
  6                                                                   250.00     17.50      250.00       15.00      250.00    12.50
  7                                                                   250.00     17.50      250.00       15.00      250.00    12.50
  8                                                                   250.00     17.50      250.00       15.00      250.00    12.50
  9                                                                   250.00     17.50      250.00       15.00      250.00    12.50
 10                                                                   250.00     17.50      250.00       15.00      250.00    12.50
 11                                                                   250.00     17.50      250.00       15.00      250.00    12.50
  0                                                                   250.00     17.50      250.00       15.00      250.00    12.50
  1                                                                    68.40      4.79      250.00       15.00      250.00    12.50
  2             3,405.07  318.96   227.29                               0.00      0.00        0.00        0.00        0.00     0.00
  2                                                                                         250.00       17.50      250.00    15.00
  3                                                                                         250.00       17.50      250.00    15.00
  4                                                                                         250.00       17.50      250.00    15.00
  5                                                                                         250.00       17.50      250.00    15.00
  6                                                                                         250.00       17.50      250.00    15.00
  7                                                                                         250.00       17.50      250.00    15.00
  8                                                                                         250.00       17.50      250.00    15.00
  9                                                                                         250.00       17.50      250.00    15.00
 10                                                                                         250.00       17.50      250.00    15.00
 11                                                                                         250.00       17.50      250.00    15.00
  0                                                                                         210.38       14.73      250.00    15.00
  1                                                                                           0.00        0.00      250.00    15.00
  2             6,459.43  648.77   394.73                                                     0.00        0.00        0.00     0.00
  2                                                                                                                 250.00    17.50
  3                                                                                                                 250.00    17.50
  4                                                                                                                 250.00    17.50
  5                                                                                                                 250.00    17.50
  6                                                                                                                 250.00    17.50
  7                                                                                                                 250.00    17.50
  8                                                                                                                 250.00    17.50
  9                                                                                                                 250.00    17.50
 10                                                                                                                  99.44     6.96
 11                                                                                                                   0.00     0.00
  0                                                                                                                   0.00     0.00
  1                                                                                                                   0.00     0.00
  2             9,048.11  950.63   496.96                                                                             0.00     0.00

</TABLE> 
<PAGE>
 



                           HYPOTHETICAL PERFORMANCE
                            FOR A CONTRACT BASED ON
          AVERAGE ANNUAL TOTAL RETURNS FOR INTERNATIONAL EQUITY FUND

<TABLE> 
<CAPTION> 

Period Ending:             12/31/97
1 Year                      -10.77%
since inception - fund       -1.11%

<S>             <C>            <C>         <C>          <C>           <C>          <C>           <C>      <C> 
  10/31/94             1       1000           1000                    12/31/96     1.127927      1000        1000
  10/31/95      1.017689        -30         987.69                    12/31/97     1.097793       -30      943.28
  10/31/96      1.103207        -30        1040.69                                                          94.33
  10/31/97      1.121684        -30        1028.12                                                          50.94
  12/31/97      1.097793         -5        1001.22                                                         892.34
                               
                                            102.81                                                        -10.77%
                                             35.94
                                            965.28
                              
                                            -1.11%
                              
                              
   4/19/95      1.034298       1000           1000
   4/19/96      1.109502        -30        1042.71
   4/19/97      1.079483        -30         984.50
  12/31/97      1.097793        -20         981.20      1001.20
# LEAP YEARS                      1
                                   
                          free               98.45
                          surr chg        44.13737
                          surr value        937.06
                                   
                          return            -2.38%

</TABLE> 


                                    Page 1
<PAGE>
 
<TABLE> 
<CAPTION> 

CALCULATION                     $10,000 Single Payment

No Premium Tax   Contract Value                                                                   Surrender Value
                 ------------------------                                                         -------------------
                                                                                                                     free withdrawal
                                                                                                                     AMOUNTS
                                              0 :Prem Tax
                 Venture Value                        Venture Value                             Venture Value    Venture Value
                            CV         Paymts     Fee      UV's
  <S>            <C>                   <C>        <C> <C>                <C>   <C>      <C>     <C>              <C> 
   11/1/94           10,000.00         10,000       0    0.999962        1     0.07
  12/31/94            9,628.18              0       0    0.962781        1     0.07     2            9,019.20            1000
   11/1/95           12,740.42              0     -30    1.276993        2     0.06     0
  12/31/95           13,193.58              0       0    1.322415        2     0.06     2           12,588.58        3193.579
   11/1/96           15,279.03              0     -30     1.53445        3     0.05     0
  12/31/96           16,338.32              0       0    1.640833        3     0.05     2           15,833.32        6338.322
   11/1/97           20,803.37              0     -30    2.092264        4     0.04     0
  12/31/97           21,477.28              0       0     2.16004        4     0.04     2           21,072.28        11477.28
                   
<CAPTION> 

Percent Change   Contract Value               0 :Prem Tax
                 ------------------------     

                 Venture Value
  <S>            <C> 
  12/31/94              -3.72%
   11/1/95              32.32%
  12/31/95               3.56%
   11/1/96              15.81%
  12/31/96              63.38%
   11/1/97              27.33%
  12/31/97               3.24%

</TABLE> 
<PAGE>
 
<TABLE> 
<CAPTION> 

CALCULATION           $250 Per Month              0 :Prem Tax

No Premium Tax


             Cumulative Venture Value                    Net               Venture Value
              Payments            CV                  Paymts           Fee          UV's    
<S>           <C>           <C>               <C>     <C>              <C>   <C>                        <C>         <C>         <C> 
 11/1/94           250        250.00          250        250             0      0.999962                0           1           0.07
 12/1/94           500        486.73          250        250             0      0.946871                1           1           0.07
12/31/94           500        494.91            0          0             0      0.962781                2           1           0.07
  1/1/95           750        744.91          250        250             0      0.962781                2           1           0.07
  2/1/95         1,000      1,015.62          250        250             0      0.989552                3           1           0.07
  3/1/95         1,250      1,315.77          250        250             0      1.038416                4           1           0.07
  4/1/95         1,500      1,584.48          250        250             0       1.05318                5           1           0.07
  5/1/95         1,750      1,897.04          250        250             0      1.094765                6           1           0.07
  6/1/95         2,000      2,234.44          250        250             0      1.145205                7           1           0.07
  7/1/95         2,250      2,540.14          250        250             0       1.17375                8           1           0.07
  8/1/95         2,500      2,900.89          250        250             0      1.224924                9           1           0.07
  9/1/95         2,750      3,243.71          250        250             0       1.26412               10           1           0.07
 10/1/95         3,000      3,591.89          250        250             0      1.302383               11           1           0.07
 11/1/95         3,250      3,741.87          250        250           -30      1.276993                0           2           0.06
 12/1/95         3,500      4,109.16          250        250             0      1.317021                1           2           0.06
12/31/95         3,500      4,125.99            0          0             0      1.322415                2           2           0.06
  1/1/96         3,750      4,375.99          250        250             0      1.322415                2           2           0.06
  2/1/96         4,000      4,733.72          250        250             0      1.354972                3           2           0.06
  3/1/96         4,250      5,076.97          250        250             0      1.381662                4           2           0.06
  4/1/96         4,500      5,402.26          250        250             0      1.402154                5           2           0.06
  5/1/96         4,750      5,634.43          250        250             0      1.397525                6           2           0.06
  6/1/96         5,000      5,958.88          250        250             0       1.41599                7           2           0.06
  7/1/96         5,250      6,256.64          250        250             0       1.42734                8           2           0.06
  8/1/96         5,500      6,358.74          250        250             0        1.3936                9           2           0.06
  9/1/96         5,750      6,692.94          250        250             0      1.412052               10           2           0.06
 10/1/96         6,000      7,280.47          250        250             0      1.483264               11           2           0.06
 11/1/96         6,250      7,751.71          250        250           -30       1.53445                0           3           0.05
 12/1/96         6,500      8,643.76          250        250             0      1.661542                1           3           0.05
12/31/96         6,500      8,536.02            0          0             0      1.640833                2           3           0.05
  1/1/97         6,750      8,786.02          250        250             0      1.640833                2           3           0.05
  2/1/97         7,000      9,576.46          250        250             0      1.741763                3           3           0.05
  3/1/97         7,250      9,844.16          250        250             0      1.744982                4           3           0.05
  4/1/97         7,500      9,726.62          250        250             0      1.679831                5           3           0.05
  5/1/97         7,750     10,400.39          250        250             0      1.753018                6           3           0.05
  6/1/97         8,000     11,222.39          250        250             0       1.84943                7           3           0.05
  7/1/97         8,250     12,097.71          250        250             0      1.952483                8           3           0.05
  8/1/97         8,500     13,321.89          250        250             0      2.109708                9           3           0.05
  9/1/97         8,750     13,052.87          250        250             0      2.027514               10           3           0.05
 10/1/97         9,000     14,229.70          250        250             0      2.171479               11           3           0.05
 11/1/97         9,250     13,930.60          250        250           -30      2.092264                0           4           0.04
 12/1/97         9,500     14,607.10          250        250             0       2.15632                1           4           0.04
12/31/97         9,500     14,632.30            0          0             0       2.16004                2           4           0.04
           
<CAPTION> 

                                       amt subject to         amt subject to       amt subject to          amt subject to     
                                         surr charge           surr charge          surr charge             surr charge            
       Venture      FREE     SURR         12/31/94      SURR     12/31/95    SURR     12/31/96       SURR     12/31/97       SURR  
           CSV    WTHDRL     CHG                         CHG                  CHG                     CHG                     CHG  
 <S>   <C>        <C>       <C>        <C>             <C>    <C>           <C>    <C>              <C>    <C>              <C> 
 0                                          250.00     17.50     250.00     15.00      250.00       12.50      250.00       10.00  
 1                                          219.91     15.39     250.00     15.00      250.00       12.50      250.00       10.00  
 2       457.01    25.00    32.89             0.00      0.00       0.00      0.00        0.00        0.00        0.00        0.00  
 2                                                               250.00     17.50      250.00       15.00      250.00       12.50  
 3                                                               250.00     17.50      250.00       15.00      250.00       12.50  
 4                                                               250.00     17.50      250.00       15.00      250.00       12.50  
 5                                                               250.00     17.50      250.00       15.00      250.00       12.50  
 6                                                               250.00     17.50      250.00       15.00      250.00       12.50  
 7                                                               250.00     17.50      250.00       15.00      250.00       12.50  
 8                                                               250.00     17.50      250.00       15.00      250.00       12.50  
 9                                                               250.00     17.50      250.00       15.00      250.00       12.50  
10                                                               250.00     17.50      250.00       15.00      250.00       12.50  
11                                                               250.00     17.50      250.00       15.00      250.00       12.50  
 0                                                               250.00     17.50      250.00       15.00      250.00       12.50  
 1                                                               250.00     17.50      250.00       15.00      250.00       12.50  
 2     3,880.99   374.19   240.00                                  0.00      0.00        0.00        0.00        0.00        0.00  
 2                                                                           0.00      250.00       17.50      250.00       15.00  
 3                                                                           0.00      250.00       17.50      250.00       15.00  
 4                                                                           0.00      250.00       17.50      250.00       15.00  
 5                                                                           0.00      250.00       17.50      250.00       15.00  
 6                                                                           0.00      250.00       17.50      250.00       15.00  
 7                                                                           0.00      250.00       17.50      250.00       15.00  
 8                                                                           0.00      250.00       17.50      250.00       15.00  
 9                                                                           0.00      250.00       17.50      250.00       15.00  
10                                                                           0.00      250.00       17.50      250.00       15.00  
11                                                                           0.00      250.00       17.50      250.00       15.00  
 0                                                                           0.00      250.00       17.50      250.00       15.00  
 1                                                                           0.00      250.00       17.50      250.00       15.00  
 2     8,116.02  1251.71   415.00                                            0.00        0.00        0.00        0.00        0.00  
 2                                                                                                             250.00       17.50  
 3                                                                                                             250.00       17.50  
 4                                                                                                             250.00       17.50  
 5                                                                                                             250.00       17.50  
 6                                                                                                             250.00       17.50  
 7                                                                                                             250.00       17.50  
 8                                                                                                             250.00       17.50  
 9                                                                                                             250.00       17.50  
10                                                                                                             250.00       17.50  
11                                                                                                             250.00       17.50  
 0                                                                                                             250.00       17.50  
 1                                                                                                             250.00       17.50  
 2    14,067.30  4430.60   560.00                                                                                0.00        0.00  

</TABLE> 
<PAGE>
 



                           HYPOTHETICAL PERFORMANCE
                            FOR A CONTRACT BASED ON
              AVERAGE ANNUAL TOTAL RETURNS FOR VENTURE VALUE FUND

<TABLE> 
<CAPTION> 

Period Ending:               12/31/97
1 Year                         22.64%
since inception - fund         24.28%

<S>              <C>             <C>         <C>                        <C>         <C>        <C>      <C> 
   10/31/94             1        1000           1000                    12/31/96    1.640833   1000        1000
   10/31/95      1.268139         -30        1238.14                    12/31/97     2.16004    -30     1286.43
   10/31/96      1.536507         -30        1470.16                                                     286.43
   10/31/97      2.092264         -30        1971.92                                                         60
   12/31/97       2.16004          -5        2030.79                                                    1226.43
                                
                                             1030.79                                                     22.64%
                                                  40
                                             1990.79
                                
                                              24.28%
                                
                                
    4/19/95      1.071349        1000           1000
    4/19/96      1.374044         -30        1252.54
    4/19/97      1.676706         -30        1498.43
   12/31/97       2.16004         -20        1910.38      1930.38
# LEAP YEARS                        1
                                  
                          free                910.38
                          surr chg                50
                          surr value         1860.38

                          return              25.84%

</TABLE> 


                                    Page 1
<PAGE>
 
<TABLE> 
<CAPTION> 

CALCULATION               $10,000 Single Payment

No Premium Tax     Contract Value                                                           Surrender Value
                   ----------------------------                                             --------------------
                                                                                                                free withdrawal
                                                                                                                AMOUNTS
                                        0 :Prem Tax
                        Bond                         Bond                                           Bond            Bond
                          CV     Paymts    Fee       UV's                                                    
      <S>          <C>           <C>       <C>    <C>                  <C>  <C>      <C>       <C>              <C> 
       11/1/94     10,000.00     10,000      0    0.999962             1    0.07                             
      12/31/94      9,838.06          0      0    0.983769             1    0.07     2          9,214.40            1000
       11/1/95     11,240.71          0    -30    1.127028             2    0.06     0                       
      12/31/95     11,551.12          0      0    1.158151             2    0.06     2         10,946.12        1551.122
       11/1/96     12,756.03          0    -30    1.281967             3    0.05     0                       
      12/31/96     12,993.92          0      0    1.305874             3    0.05     2         12,488.92        2993.916
       11/1/97     13,977.24          0    -30    1.407712             4    0.04     0                       
      12/31/97     14,201.85          0      0    1.430333             4    0.04     2         13,796.85        4201.846

<CAPTION> 

Percent Change     Contract Value       0 :Prem Tax
                   ------------------
     <S>              <C>                   
                        Bond
      12/31/94        -1.62%
       11/1/95        14.26%
      12/31/95         2.76%
       11/1/96        10.43%
      12/31/96         1.86%
       11/1/97         7.57%
      12/31/97         1.61%
</TABLE> 
<PAGE>
 
<TABLE> 
<CAPTION> 

CALCULATION               $250 Per Month           0 :Prem Tax

No Premium Tax                           

         Cumulative Bond                        Net                Bond
            Payments          CV             Paymts      Fee         UV's                                                           
<S>      <C>            <C>             <C>  <C>         <C>     <C>                      <C>         <C>         <C> 
 11/1/94         250      250.00        250     250        0     0.999962                 0           1           0.07              
 12/1/94         500      499.71        250     250        0     0.998811                 1           1           0.07              
12/31/94         500      492.19          0       0        0     0.983769                 2           1           0.07              
  1/1/95         750      742.19        250     250        0     0.983769                 2           1           0.07              
  2/1/95       1,000      997.34        250     250        0     0.990595                 3           1           0.07              
  3/1/95       1,250    1,250.32        250     250        0     0.993562                 4           1           0.07              
  4/1/95       1,500    1,511.55        250     250        0     1.002485                 5           1           0.07              
  5/1/95       1,750    1,823.43        250     250        0      1.04352                 6           1           0.07              
  6/1/95       2,000    2,155.48        250     250        0      1.09048                 7           1           0.07              
  7/1/95       2,250    2,418.95        250     250        0     1.097292                 8           1           0.07              
  8/1/95       2,500    2,679.23        250     250        0     1.101958                 9           1           0.07              
  9/1/95       2,750    2,952.81        250     250        0     1.111656                10           1           0.07              
 10/1/95       3,000    3,228.85        250     250        0     1.121458                11           1           0.07              
 11/1/95       3,250    3,464.89        250     250      -30     1.127028                 0           2           0.06              
 12/1/95       3,500    3,759.95        250     250        0     1.141686                 1           2           0.06              
12/31/95       3,500    3,814.17          0       0        0     1.158151                 2           2           0.06              
  1/1/96       3,750    4,064.17        250     250        0     1.158151                 2           2           0.06              
  2/1/96       4,000    4,458.52        250     250        0     1.199285                 3           2           0.06              
  3/1/96       4,250    4,691.68        250     250        0     1.194756                 4           2           0.06              
  4/1/96       4,500    4,923.58        250     250        0     1.190146                 5           2           0.06              
  5/1/96       4,750    5,194.28        250     250        0      1.19515                 6           2           0.06              
  6/1/96       5,000    5,470.59        250     250        0     1.201204                 7           2           0.06              
  7/1/96       5,250    5,772.03        250     250        0     1.212497                 8           2           0.06              
  8/1/96       5,500    6,080.68        250     250        0     1.224818                 9           2           0.06              
  9/1/96       5,750    6,360.66        250     250        0     1.230858                10           2           0.06              
 10/1/96       6,000    6,844.39        250     250        0     1.276086                11           2           0.06              
 11/1/96       6,250    7,095.93        250     250      -30     1.281967                 0           3           0.05              
 12/1/96       6,500    7,461.04        250     250        0     1.302763                 1           3           0.05              
12/31/96       6,500    7,478.86          0       0        0     1.305874                 2           3           0.05              
  1/1/97       6,750    7,728.86        250     250        0     1.305874                 2           3           0.05              
  2/1/97       7,000    8,056.04        250     250        0     1.318915                 3           3           0.05              
  3/1/97       7,250    8,393.29        250     250        0     1.333199                 4           3           0.05              
  4/1/97       7,500    8,477.87        250     250        0     1.306924                 5           3           0.05              
  5/1/97       7,750    8,841.48        250     250        0     1.324438                 6           3           0.05              
  6/1/97       8,000    9,238.31        250     250        0     1.346432                 7           3           0.05              
  7/1/97       8,250    9,607.15        250     250        0     1.363753                 8           3           0.05              
  8/1/97       8,500   10,060.12        250     250        0     1.392564                 9           3           0.05              
  9/1/97       8,750   10,315.41        250     250        0     1.393297                10           3           0.05              
 10/1/97       9,000   10,799.44        250     250        0     1.424907                11           3           0.05              
 11/1/97       9,250   10,889.12        250     250      -30     1.407712                 0           4           0.04              
 12/1/97       9,500   11,229.19        250     250        0     1.419356                 1           4           0.04              
12/31/97       9,500   11,316.03          0       0        0     1.430333                 2           4           0.04              

<CAPTION> 

                                            amt subject to        amt subject to       amt subject to       amt subject to  
                                             surr charge           surr charge          surr charge          surr charge  
           Venture      FREE      SURR        12/31/94      SURR     12/31/95     SURR    12/31/96     SURR    12/31/97       SURR
               CSV     WTHDRL      CHG                       CHG                   CHG                  CHG                    CHG
   <S>     <C>         <C>       <C>        <C>            <C>    <C>            <C>   <C>            <C>   <C>              <C> 
    0                                          250.00      17.50      250.00     15.00     250.00     12.50     250.00       10.00
    1                                          217.19      15.20      250.00     15.00     250.00     12.50     250.00       10.00
    2       454.48     25.00     32.70           0.00       0.00        0.00      0.00       0.00      0.00       0.00        0.00
    2                                                                 250.00     17.50     250.00     15.00     250.00       12.50
    3                                                                 250.00     17.50     250.00     15.00     250.00       12.50
    4                                                                 250.00     17.50     250.00     15.00     250.00       12.50
    5                                                                 250.00     17.50     250.00     15.00     250.00       12.50
    6                                                                 250.00     17.50     250.00     15.00     250.00       12.50
    7                                                                 250.00     17.50     250.00     15.00     250.00       12.50
    8                                                                 250.00     17.50     250.00     15.00     250.00       12.50
    9                                                                 250.00     17.50     250.00     15.00     250.00       12.50
   10                                                                 250.00     17.50     250.00     15.00     250.00       12.50
   11                                                                 250.00     17.50     250.00     15.00     250.00       12.50
    0                                                                 250.00     17.50     250.00     15.00     250.00       12.50
    1                                                                 217.69     15.24     250.00     15.00     250.00       12.50
    2     3,571.44    346.49    237.74                                  0.00      0.00       0.00      0.00       0.00        0.00
    2                                                                             0.00     250.00     17.50     250.00       15.00
    3                                                                             0.00     250.00     17.50     250.00       15.00
    4                                                                             0.00     250.00     17.50     250.00       15.00
    5                                                                             0.00     250.00     17.50     250.00       15.00
    6                                                                             0.00     250.00     17.50     250.00       15.00
    7                                                                             0.00     250.00     17.50     250.00       15.00
    8                                                                             0.00     250.00     17.50     250.00       15.00
    9                                                                             0.00     250.00     17.50     250.00       15.00
   10                                                                             0.00     250.00     17.50     250.00       15.00
   11                                                                             0.00     250.00     17.50     250.00       15.00
    0                                                                             0.00     250.00     17.50     250.00       15.00
    1                                                                             0.00     250.00     17.50     250.00       15.00
    2     7,058.86    709.59    415.00                                            0.00       0.00      0.00       0.00        0.00
    2                                                                                                           250.00       17.50
    3                                                                                                           250.00       17.50
    4                                                                                                           250.00       17.50
    5                                                                                                           250.00       17.50
    6                                                                                                           250.00       17.50
    7                                                                                                           250.00       17.50
    8                                                                                                           250.00       17.50
    9                                                                                                           250.00       17.50
   10                                                                                                           250.00       17.50
   11                                                                                                           250.00       17.50
    0                                                                                                           250.00       17.50
    1                                                                                                           250.00       17.50
    2    10,751.03   1389.12    560.00                                                                            0.00        0.00

</TABLE> 
<PAGE>
 

                            HYPOTHETICAL PERFORMANCE
                             FOR A CONTRACT BASED ON
            AVERAGE ANNUAL TOTAL RETURNS FOR BOND OPPORTUNITIES FUND

<TABLE> 
<CAPTION> 

Period Ending:             12/31/97
1 Year                        0.78%
since inception - fund        8.19%

<S>         <C>                <C>        <C>         <C>            <C>          <C>         <C>       <C> 
 10/31/94          1           1000          1000                    12/31/96     1.305874    1000         1000
 10/31/95   1.126073            -30       1096.07                    12/31/97     1.430333     -30      1065.31
 10/31/96   1.279903            -30       1215.80                                                        106.53
 10/31/97   1.407712            -30       1307.21                                                         57.53
 12/31/97   1.430333             -5       1323.22                                                       1007.78
                          
                                           323.22                                                         0.78%
                                               40
                                          1283.22
                          
                                            8.19%
                          
                          
 4/19/95    1.030925           1000          1000
 4/19/96    1.193575            -30       1127.77
 4/19/97     1.30943            -30       1207.24
12/31/97    1.430333            -20       1298.71     1318.71
# LEAP YEARS                      1

                         free              298.71
                         surr chg              50
                         surr value       1248.71
                  
                         return             8.57%
</TABLE> 


                                    Page 1

<PAGE>
 
                                                                      Exhibit 14

                               POWER OF ATTORNEY
                               -----------------

     I, the Chairman, President and Chief Executive Officer of New England Life
Insurance Company, a Massachusetts corporation, hereby constitute and appoint
Anne M. Goggin, Rodney J. Chandler, Maura A. Murphy, Marie C. Swift and H. James
Wilson, each of them singly, my true and lawful attorneys, with full power to
them and each of them to sign for me and in my name and in the capacities
indicated below, the Registration Statements filed with the Securities and
Exchange Commission for the purpose of registering New England Variable Life
Separate Account established by New England Life Insurance Company on January
31, 1983 as a unit investment trust under the Investment Company Act of 1940 and
the variable life policies issued by said separate account under the Securities
Act of 1933, and any and all amendments thereto, hereby ratifying and confirming
my signature as it may be signed by my said attorneys to said Registration
Statements and any and all amendments thereto.

     In addition, I, the Chairman, President and Chief Executive Officer of New
England Life Insurance Company, a Massachusetts corporation, hereby constitute
and appoint Anne M. Goggin, Rodney J. Chandler, Maura A. Murphy, Marie C. Swift
and H. James Wilson, each of them singly, my true and lawful attorneys, with
full power to them and each of them to sign for me and in my name and in the
capacities indicated below, the Registration Statements filed with the
Securities and Exchange Commission for the purpose of registering New England
Variable Annuity Separate Account established by New England Life Insurance
Company on July 1, 1994 as a unit investment trust under the Investment Company
Act of 1940 and the variable annuity contracts issued by said separate account
under the Securities Act of 1933, and any and all amendments thereto, hereby
ratifying and confirming my signature as it may be signed by my said attorneys
to said Registration Statements and any and all amendments thereto.

     Witness my hand on the 27th of May, 1998.



                                     /s/ James M. Benson
                                     -------------------
                                     James M. Benson
                                     Chairman, President and
                                     Chief Executive Officer
<PAGE>
 
                               POWER OF ATTORNEY
                               -----------------

     I, the Executive Vice President, Chief Financial Officer and Chief
Accounting Officer of New England Life Insurance Company, a Massachusetts
corporation, hereby constitute and appoint Anne M. Goggin, Rodney J. Chandler,
Maura A. Murphy, Marie C. Swift and H. James Wilson, each of them singly, my
true and lawful attorneys, with full power to them and each of them to sign for
me and in my name and in the capacities indicated below, the Registration
Statements filed with the Securities and Exchange Commission for the purpose of
registering New England Variable Life Separate Account established by New
England Life Insurance Company on January 31, 1983 as a unit investment trust
under the Investment Company Act of 1940 and the variable life policies issued
by said separate account under the Securities Act of 1933, and any and all
amendments thereto, hereby ratifying and confirming my signature as it may be
signed by my said attorneys to said Registration Statements and any and all
amendments thereto.

     In addition, I, the Executive Vice President, Chief Financial Officer and
Chief Accounting Officer of New England Life Insurance Company, a Massachusetts
corporation, hereby constitute and appoint Anne M. Goggin, Rodney J. Chandler,
Maura A. Murphy, Marie C. Swift and H. James Wilson, each of them singly, my
true and lawful attorneys, with full power to them and each of them to sign for
me and in my name and in the capacities indicated below, the Registration
Statements filed with the Securities and Exchange Commission for the purpose of
registering New England Variable Annuity Separate Account established by New
England Life Insurance Company on July 1, 1994 as a unit investment trust under
the Investment Company Act of 1940 and the variable annuity contracts issued by
said separate account under the Securities Act of 1933, and any and all
amendments thereto, hereby ratifying and confirming my signature as it may be
signed by my said attorneys to said Registration Statements and any and all
amendments thereto.

     Witness my hand on the 22nd of May, 1998.


                                     /s/ Robert E. Schneider
                                     -----------------------
                                     Robert E. Schneider
                                     Executive Vice President,
                                     Chief Financial Officer and
                                     Chief Accounting Officer


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